Boost, a virtual network operator with an established business in the Australian market, has announced a partnership with Nextel to target young consumers in the US.

The company will use Nextel’s iDEN network and sell a range of customised Motorola handsets on pre-paid tariffs. The devices will feature mobile Java capabilities and include several pre-installed games through a partnership with developer THQ. Nextel is better known for its success in the enterprise market, but the unique iDEN technology will allow Boost to offer digital walkie-talkie capabilities unavailable on other US networks. Boost markets itself as a ‘lifestyle telecommunications company’ and is planning to associate itself with leading extreme sports figures in the US, just as it has done in Australia and New Zealand. Virgin Mobile, a successful MVNO with operations in the UK and Australia, became the first pre-paid operator in the US when it launched the Virgin brand on Sprint’s network in June.

“It quickly became clear to the Boost team that only one nationwide wireless provider in the United States offers any true service differentiation, and that is Nextel with its digital walkie-talkie and leading wireless data network,” said Peter Adderton, a founder and member of the Board of Directors of Boost Mobile, LLC. “American youth are technically savvy, have considerable spending power, and demand instant communications. Boost Mobile will leverage the unique handset designs, service features, quality and brand credibility of the Nextel National Network to offer the first wireless lifestyle device for American youth, rather than “youth-repackaging” traditional wireless phone service.” Tom Kelly, Nextel’s executive vice president and chief marketing officer, added: “Boost Mobile will offer the first true youth brand in the wireless market in the United States. We chose to go after this customer segment with the Boost Mobile leadership team because of their unparalleled expertise in developing wireless offerings that are uniquely suited to the lifestyle and behaviors of young people. Bolstered by Nextel’s unrivaled walkie-talkie, two-way messaging, wireless web and Java-enabled gaming capabilities, the Boost Mobile proposition is very exciting.”

Insight

Expect this to be the first of many announcements aimed at capturing the hearts and minds of young US consumers. The major operators in North America have avoided pre-paid billing so far and thus penetration in the youth market remains relatively low. However, there are lessons to be learnt from Western Europe, where operators are still recovering from the hangover of a low revenue, high cost boom in pre-paid, fuelled by subsidised handsets. Nextel and Sprint have been prudent in shifting the execution risk to MVNOs like Boost and Virgin.

Boost’s model of high profile sports sponsorships and creating a lifestyle associated with its service has worked for consumer products groups the world over and there is a high chance of success among cliquey US kids. The question is whether Boost can use its image to generate demand for additional applications and services above and beyond normal voice and text usage. By working with Nextel and Motorola iDEN, which already have an established mechanism for mobile Java application delivery, colour screen handsets and packet data capabilities, Boost has shown a determination to build a significant business out of mobile data.