EarthLink, Korean Operator Creating New U.S. Wireless Company

EarthLink said Wednesday that it is partnering with Korean wireless operator SK Telecom to create a new wireless operator in the U.S. that will focus on providing advanced Internet services such as streaming multimedia.

The two companies will equally co-own the new venture, which will be called SK-EarthLink. The new company will be a virtual wireless provider, acquiring services from other mobile operators, although the companies did not say from which operator they would acquire the services or when the new service would fully launch.

The executives did say in a Wednesday morning conference call, however, that theirs will be a 3G CDMA network and, in the U.S., the only national carriers offering such service are Sprint and Verizon Wireless. Of those two operators, only Sprint already is providing services to other virtual operators, including AT&T and ESPN. SK Telecom uses CDMA technology in Korea.

Primarily, however, executives in the conference call stressed that the goal of the joint venture is to offer services not currently available in the U.S.

"If you've ever had a chance to visit Korea and Japan and see the plethora of things you can do in the cellular market that don't exist in the U.S., you can bet that some of those that are appropriate are high on the list of things we'll make available to U.S. consumers," Garry Betty, EarthLink's CEO told analysts in a conference call Wednesday morning.EarthLink's founder Sky Dayton, who will serve as CEO of the joint venture, also stressed how the new company will emphasize new technology.

"In South Korea, kids on the street are using their mobile phones to listen to music, watch TV, video conference, locate their friends and access the Internet -- as well as make voice calls -- as opposed to the U.S. where the mobile experience is primarily about talking on the phone," Dayton said in a statement. "Americans are living in the past. Utilizing emerging 3G networks and harnessing the explosive growth of Wi-Fi, SK-EarthLink will take the wireless experience in the U.S. to a new level."

The executives said that initial offerings starting as early as this summer will include converged devices, such as BlackBerries, that EarthLink already offers to its subscribers. Soon afterward, however, the new operator will offer smartphones and other converged devices as well as PC Card adapters to give laptops access to the 3G network.

The companies projected that the joint venture could gain 3 million subscribers and generate revenues of $2 billion by 2009, which would represent about three percent of the overall U.S. market. The companies also said that they will offer advanced services aimed at high-end, technically comfortable users are most interested. Ultimately, the executives said the new venture will employ between 400 and 500 people.