Blyk's Antti Öhrling and Aircel's Gurdeep Singh at the launch of Blyk on Aircel in November 2010

Indian carrier Aircel teamed with youth media firm Blyk to launch a content and advertising service in November 2010. It represented the first deployment for Blyk outside of Europe, the firm having switched its model from ad-funded virtual operator to carrier partner after its MVNO play failed to gain the necessary traction. Blyk co-founder Antti Öhrling and Aircel COO Gurdeep Singh spoke to Mike Hibberd about the drivers behind this latest partnership, and the firms’ plans for the future.

Demographically, India would appear to be the perfect place to launch a youth-centric mobile service. For a start, there are hundreds of millions of young people there—a whopping 55 per cent of the Indian population, which is approaching 1.2 billion in total, is below 40 years of age.

Mobile penetration is over 60 per cent, and even higher among the younger population, while fixed penetration is low—and in decline. Today 95 per cent of Indians’ first telephone calls are made over mobile networks and, with fixed broadband penetration languishing in the single digits, the Indian internet experience has become, de facto, a mobile internet experience.

A regional player in Tamil Nadu since its launch in 1999, moving four years later into Chennai, Aircel embarked upon a nationwide expansion in 2005. At the end of January this year, as the seventh-placed player in the Indian mobile market, Aircel had just over 54 million customers, according to estimates from Informa’s World Cellular Information Service. More than 85 per cent of those customers are in the 14 – 24 age bracket, says COO Gurdeep Singh, with the remainder between the ages of 25 and 35.

Singh explains that his company made the youth market its target from the beginning of its expansion, placing a safe bet that mobile would be the segment’s medium of choice. As the market has evolved, the segment’s behaviour has marked it out, he says.

“The youth are far more reliant on peer recommendation,” he says. “They love to update themselves, to have real time information about what’s happening in their city. It’s important to give them a service like this in a manner that is non-intrusive, participative and permission based. That’s where we spotted the opportunity to work with Blyk.”

The Blyk on Aircel service provides a range of content to its customers, covering the familiar territories of entertainment, sport and lifestyle. Over a period of six to eight weeks, says Blyk’s Antti Öhrling, users’ preferences become clear, making way for the targeted advertising which is at the heart of the Blyk proposition.

For the time being, however, Aircel is not looking to Blyk to monetise its advertising inventory. Instead, says Singh, it is a weapon deployed in the face of rampant churn. “What’s most interesting for us is that, in a hyper-competitive market like India, this can really act as a differentiation and retention tool,” he says. “There are 14 operators in this market and churn is very high; 90 days after acquisition we retain just a little over 60 per cent of new customers. But with Blyk our retention level moves up to 89 per cent. So it’s really meeting our needs.”

In acquisition terms the service is also proving useful with member-get-member schemes, Singh says. “We have a consumer insight group which keeps in touch with the customers, making sure they find it good enough to recommend to their friends. People find this product so infectious that it is the right kind of thing for member-get-member and we see a good number of acquisitions coming through that,” he says.

So far Aircel has deployed the Blyk service in 20 metropolitan markets. By Mid-March 2011 it had attracted more than 300,000 users, and is adding in the region of 25,000 a month, Singh reveals. From the middle of this year he expects this to ramp up to 30,000 adds a month and, by 2012, he wants to see ten per cent of all rural connections and 25 per cent of all metropolitan connections joining Aircel through the Blyk offering.

The plan is that the service will be available in more than 100 cities by 2012, keeping pace with the carrier’s 3G rollout, which began in March this year. That 3G rollout, it is hoped, will improve both the service experience and the incremental revenues derived from the offering.

Currently, says Singh, Aircel ARPU sits at just $3.50, with Blyk users spending above average. “What we have seen with Blyk users is that, in spite of 3G not being there, we’re getting half a dollar extra revenue. That’s why we’re encouraged to make it the mainstay of our acquisition products going forward,” he says.

Today the service makes most use of SMS and MMS channels, with MMS being available across a wide range of handsets in the Indian market. Antti Öhrling reports that, contrary to the firm’s experience in other markets, MMS messages are proving more effective than SMS at generating response and interaction from the end users.

While the service may currently be delivering benefits primarily in the areas of acquisition and retention, the fact remains that the Blyk proposition is a media channel designed to appeal to brands that are targeting the youth market. The content distributed over the service is intended to stimulate response and, according to Öhrling, this is starting to generate results in India.

“On average we have been getting 27 per cent response rates,” Öhrling says. “It’s a little higher than what we expected and so we’re very happy. Because we are interactive we can develop the content on a continuous basis. Within a minute we know whether or not something has worked and I think that, with Aircel, we’re just starting to explore all the opportunities we have.”

Öhrling says that, of all the content made available over Blyk on Aircel, advertising is generating the strongest interactions from users, which chimes with statistics the company has published showing that the Indian mobile advertising market grew by 217 per cent in 2010, compared to 93 per cent worldwide. “Beyond the advertising,” he adds, “we’re finding that the local content, things closest to people’s hearts, that’s what’s getting the best responses.”

In Blyk’s early deployments the company discovered that brands were preferring to use the medium for market research rather than direct marketing. But in India, Öhrling says, the service appeals to brands more in terms of stimulating purchases. “I would say that, for the brands, it brings the user much closer to the purchase than any other medium, and that’s what they feel is very exciting,” he says.

Many of the launch brands for the Indian service are lifestyle firms, beverage and clothing brands, for example. Smirnoff, Red Bull and Bacardi have all run campaigns across the Blyk platform in India, as have Diesel, Levis, Durex, Apple and Nokia. Diesel and Apple both enjoyed response rates of over 50 per cent for the first messages in their campaigns, while Nokia didn’t fare quite so well, with just 13 per cent.

The relationship between Blyk and Aircel is exclusive for the “long term”, the companies have said, meaning that the rest of the market is off limits to Blyk. The firm will no doubt be hoping that Aircel parent, Malaysia’s Maxis, will be sufficiently impressed to want to roll out similar services across its other territories.

“The parent company is watching closely,” says Gurdeep Singh. “Maxis are very excited about the service and this is something they will explore later on, possibly taking it to other group companies.”

If the service proves successful, it will no doubt spawn imitators in the Indian market. But Singh argues that the Blyk platform has the edge. “We evaluated lots of other things before signing up with Blyk,” he says. The platform is an edge, but the knowledge of how to run the service is an edge too.”

In India Blyk will target the 16-29 year old demographic

Mobile advertising and marketing firm Blyk has struck its first deal outside of Europe, launching operations in India with Aircel.

In India Blyk will target the 16-29 year old demographic, which will be sent content by way of messages, both SMS and MMS, across categories they sign up to such as entertainment, sports, lifestyle, dating and careers advice. As users respond to the content over a period of six to eight weeks, they are then sent more content from their areas of interest, which tailors the marketing to the user.

Aircel has a subscriber base of over 48 million and India has the largest youth market in the world, with over half of the population comprising of young people, a feature which makes the market ripe for mobile advertising.

Gurdeep Singh, chief operating officer at Aircel said: “Today the youth comprises over 51 per cent of the total population in India and a large percentage of the youth are using the mobile which then becomes a very powerful medium to interact, engage, entertain and connect with the youth lending them our ears to voice their areas of interest, preferences and views.”

The launch comes just weeks after Blyk opened an Asia Pacific office in Singapore.

Blyk expands to Asia Pac

Mobile advertising company Blyk is taking its model to Asia Pacific with the opening of a new office in the region this week.

Based in Singapore, Blyk’s Asia Pac offices will be run by Susanna Hasenoehrl who joins the firm from Nokia Siemens Networks.

Commenting on the move, Blyk CEO and co-founder Pekka Ala-Pietilä, said: “Following our successful operations in Europe, with Orange in the UK, and Vodafone in the Netherlands, expansion to Asia is a key element in our global strategy.  Given the enormous potential in the region, this is an important step in our growth.  Messaging is a dominant communication channel across the Asian market, and it’s clear the youth segment has a growing appetite for innovative mobile services.”

Blyk recently secured ?17m in funding in a round led by Nexit Ventures, taking total investment in the company to more than ?87m over the past four years.

Blyk is taking a crack at the Netherlands with Vodafone as a partner

Blyk, the one time ad-funded MVNO which repositioned itself as an advertising services provider, has brought its consumer offering back from the dead and is taking a crack at the Netherlands market with Vodafone as a partner.

On Wednesday, the Finnish company announced the commercial launch of its direct to consumer and mobile ad service provider offerings in the Netherlands.

The direct to consumer offering includes 1,000 free text messages and 1,000 free Blyk-to-Blyk minutes per month, in return for viewing a number of MMS-based adverts per day. The company is targeting the 16 – 29 year old demographic and requires that subscribing members are profiled. Users will also need a SIM-lock free, MMS capable mobile phone.

Blyk’s launch advertiser partners for the Netherlands include Nike, Beachmasters, Universal Pictures, McDonald’s, Pearle and Electronic Arts.

But the company is covering itself by introducing the service provisioning model as well. In the summer of 2009, Blyk wound down its virtual network operation in the UK and repositioned itself as a provider of managed services, signing an exclusive deal with Orange in the UK, the carrier that hosted its MVNO.

While the firm’s advertising response rates remained high, at 25 per cent, it lacked the kind of reach that advertisers are used to buying through more established media. And the volume of free usage made available to end users through advertising subsidies was simply insufficient. So no doubt the company’s Dutch initiative will be watched closely.

Eric Kip, MD for Blyk Netherlands, said: “Our relationship will include a co-development of the consumer proposition for the Netherlands and audience management. Blyk will have responsibility for the brand, advertising sales and technology.

“The Netherlands has the third highest advertising spend per capita in Europe and is a hub for many global companies and ad agencies, so is an obvious territory for Blyk’s expansion. The advertising market, whilst both creative and dynamic, is also cluttered so we believe youth brands will welcome a highly engaging communication channel like Blyk.”

Blyk

How does this article affect your perception of Blyk? What is this?

Blyk is Neutral

Total votes: 0

59 0 0 5989a790c6 0

Orange launches Blyk run mobile ad platform

UK operator Orange revealed what it’s been up to with failed-MVNO-turned-managed-services-provider Blyk on Tuesday, marking the launch of Blyk’s first offering in its new guise.

Blyk closed the doors on its MVNO operation at the end of August 2009, having notched up some 200,000 end users. The firm re-launched itself as an advertising services provider and since September Orange has been testing the platform with its own content and brands including 4Music, Ubisoft, COI and Snickers.

Launching full commercial service on February 1, Orange Shots will initially be available to brands who want to interact with an audience of 100,000 customers from part of Orange’s Pay As You Go Monkey customer base, which offers free music and texts to customers when they top up.

The Orange Shots service works across SMS and MMS, and like Blyk’s original model, encourages customers to message back and give views and opinions. After testing, Orange is claiming response rates of between 21-39 per cent and said it will slowly roll out the Shots platform to the rest of its subscriber base. Unanimis UK is the partner advertising agency.

Orange assures its customers that they have the opportunity to opt out at any stage, and customer data will not be shared externally to third parties.

Blyk’s original model relied on revenues from advertising customers being used to subsidise voice and text usage for 16 – 24 year-old end users (or ‘members’ as Blyk prefers to describe them). But, although initial uptake was quicker than the firm had forecast, the service was not a commercial success.

While the firm’s advertising response rates remained high, at 25 per cent, it lacks the kind of reach that advertisers are used to buying through more established media. And the volume of free usage made available to end users through advertising subsidies was simply insufficient.

Orange

How does this article affect your perception of Orange? What is this?

Orange is 47% positive

Total votes: 64

4 47 64 6d42f9f691 0

O2 UK reckons it can get mobile ads to deliver

UK mobile operator O2 is investing in the mobile advertising dream, seeking to position itself as an advertising partner that makes good use of all its customer data.

On Wednesday O2 UK launched O2 More, an opt in programme for subscribers that will match user data with voluntary preferences and deliver ads via mobile accordingly. The carrier maintains this will lead to highly personalised campaigns for advertisers. For example, if a customer says that they are interested in sports and O2 knows they roamed in Switzerland over the winter, a deal on a skiing holiday could be offered to that customer through O2 More.

O2’s subscribers signing up to More will receive no more than one ad per day. Unlike past attempts at mobile advertising, like Blyk, the carrier is offering no incentive except for the ad content itself. At launch, offers will include discounts from high street retailers and restaurants, special holiday offers and trials of new services or information about forthcoming launches.

Over 50 brands have already signed up to the More scheme, including Adidas, Cadbury, Interflora and Blockbuster, O2 said.

Despite some impressive response rates – O2 claims it got a 52 per cent response rate for a Blockbuster campaign on Top up Surprises, while Blyk, the MVNO which repositioned as a managed services provider, claimed typical rates of 25 per cent – mobile advertising has failed to get off the ground. The problem, it seems, is that it lacks the kind of reach that advertisers are used to buying through more established media. Despite lots of talk about how well equipped telcos are to deliver more personalised advertising, no service provider has yet got advertising down to a fine art, as brands seem more interested in reach.

Still, Shaun Gregory, managing director of O2 Media, the unit which will operate More, reckons all this will change. “Mobile advertising has been slow to deliver on its promise. Much of that has been down to a lack of understanding, limited opportunities and no real accountability or measurement. At O2 we understand the value of personalisation and putting the customer at the heart of everything we do,” he said. “Because customers opt in we can deliver truly relevant content that provides an experience and a richer opportunity for marketers.”

Just as Orange, which incidentally was Blyk’s first partner, did a couple of years ago, O2 Media is also opening of a central London office dedicated to mobile advertising, complete with a “rapidly expanding team,” in order to show its dedication.

O2

How does this article affect your perception of O2? What is this?

O2 is 29.8% positive

Total votes: 37

43 24 37 d002b1d57a 0

Crowd sourcing MVNO Giffgaff opens its doors

Giffgaff, the MVNO subsidiary of O2 UK, which fancies itself as a crowd sourcing pioneer, opened its doors on Wednesday with a rallying call to its user base.

The wacky service provider has more than a whiff of Blyk’s ill fated ad-funded MVNO model about it, particularly when it comes to relying on a self supporting user base. Giffgaff will award its members points for helping out, such as answering customer support enquiries, or submitting ideas for marketing, advertising, web content or even charging models.

And what are points worth? Pennies. Each point is worth a penny and users can convert them to cash, mobile credit or a charity donation twice a year. For example, getting someone join Giffgaff by giving them a SIM will earn 500 points or £5 for the existing member.

In order to kick start adoption of the service, Giffgaff is also calling on its community to help promote the offering. “We don’t have mega advertising budgets so we need our members to help make us famous,” the company said. “If you’re handy with a video camera and have a sense of humour why not try hiring one of our tools from our tool site and shoot a film for us.” Incentives for this marketing promotion include cash prizes of £5000.

Telecoms.com recently had a chat with Mike Fairman, CEO—or ‘Gaffer’ of Giffgaff. “If you look at acquisitions, then ‘member-get-member’ schemes have been used by a number of organisations very successfully. All we’re doing is using the internet with a bit of technology to make it work,” Fairman said. “On the customer service side we’re putting emphasis on customer forums, using them as a way of initially building up the quality of our responses. If you look at the site for Trip Adviser, or the forums for the iPhone, the quality of responses is very good.

“That leaves the marketing an innovation ideas and, in the UK, there’s a very creative vibrant community. If you’ve got a base of customers you only need a small percentage of those to be interested in contributing ideas for you to get a good volume,” he said.

Read our interview with Giffgaff ‘gaffer’ Mike Fairman

The point of these tactics is to slash operational costs for the MVNO. Customer service provision isn’t cheap, nor are marketing and customer acquisition. If its customers can shoulder these burdens, Fairman says Giffgaff should be able to reward them and still come out ahead.

Giffgaff is even going so far as the get its users to do some of the serious thinking for it. Web browsing from the handset will be free at launch, and Giffgaff will ask its members how they use the internet on the phone and how best to pay for it. “Because we’re people powered we’ll listen, and do our very best to introduce charging that’s simple to understand, fair and great value for money in 2010,” the company said.

Calls to UK mobiles and landlines will cost £0.08 per minute and texts £0.04 each. Most calls between Giffgaff phones will be free and the company has chosen 36 of the most popular destinations around the world where it will cost £0.08 per minute to call a landline and £0.16 to call a mobile.

Giffgaff

How does this article affect your perception of Giffgaff? What is this?

Giffgaff is Neutral

Total votes: 8

44 4 8 43f5d7fe99 0

Spotify, the service that allows users to listen to a vast range of pop music, streamed over the net in exchange for occasional adverts, unveiled its iPhone application this week, which it has submitted to the mighty fruit in the hope that it will be approved for inclusion in the vendor’s App Store. Whether or not the application will make it through Apple’s rigorous (and at times hard to fathom) approval process remains to be seen. Especially as Spotify could be seen as a competing product to Apple’s iTunes.

The company has uploaded a video giving a brief demonstration of the app, which it says is similar to the existing PC version of the service. However, whereas the PC version of the service is available in an ad-supported, free format, or an ad-free, paid-for version, the iPhone iteration of the service will only be available to premium subscribers paying £9.99/month. Spotify says the service works well over 3G and the iPhone version has the added benefit of an offline mode which allows users to download playlists to listen to in airplane mode or when beyond the wispy tendrils of network coverage.

In more music news, Orange launched a monkey this week, which makes it sound like the cold war Soviet space programme. This particular Monkey, however, is a music streaming service aimed at young and prepaid users, who don’t have fancy-Dan handsets like the iPhone. The carrier has struck a deal with Universal Music that gives it access to that firm’s catalogue, although analysts described the programme’s reliance on Universal as “extremely limited”.

Back to the use of advertising to subsidise content, though, and it looks like it didn’t work for Blyk, which issued a statement early this week, officially repositioning itself as a managed services provider. The UK-based, ad-funded MVNO will shut its doors at the end of August, turning loose some 200,000 youth segment customers. It’s high time they left home, anyway.

In the end, the MVNO was simply way off the mark in terms of subscriber numbers. While it could offer unrivalled targeting to advertisers, it was fundamentally handicapped by its lack of reach. And once it became clear earlier this year that it was not generating enough ad revenue to subsidise what was an already paltry monthly sop of 43 voice minutes and 217 texts to its end users, the game was effectively up.

But the firm’s founder, Pekka Ala-Pietilä, was unwilling to concede that the ad-for-service model was fundamentally flawed when the Informer spoke with him this week. “We did not conclude that it wouldn’t or couldn’t work,” he said, explaining that the firm still backs the concept but accepts the model was wrong.

Running an MVNO was resource intensive and time-consuming, he said, and was not delivering the kind of returns that allowed the firm to deploy quickly in other territories. This is something that it is keen to do, despite no evidence that large numbers of people really want its service. So it will now partner with operators (see its announcement with Vodafone Netherlands from last week), helping them launch and manage their own mobile advertising services.

“I don’t believe we could do that if we hadn’t managed to perfect the media model and gain the experience on the advertising side, the technical side or the consumer side by doing everything from the ground up ourselves,” said Ala-Pietilä, clinging to a positive view of the MVNO.

In the UK, Blyk has now entered into an exclusive arrangement with Orange, which was the host for its MVNO. But it’s not clear that Orange feels as positive about advertising as subsidy as its new managed service provider, with the carrier’s VP of strategy and business performance, Mark Overton, revealing that such activities would not be at the core of the services Orange will be using Blyk to launch. He did promise, though, that it was “the start of a better relationship with our customers”. It’ll be different this time, babe, I swear.

A further announcement from Orange, which is in the midst of signing a deal with retail bank Barclays, is expected next week.

Sticking with MVNOs and their hosts, Virgin Mobile in the US has this week been purchased by Sprint for some $483m. Virgin’s US operation has amassed around five million customers and for each of those customers it has amassed around $40 in debt. Sprint, which already owns 13.1 per cent of the MVNO, will pay off that debt as part of the purchase, which will also relieve Virgin of its 28.3 per cent stake and South Korea’s SK Telecom of 15.3 per cent. It will also buy up the 43.3 per cent that’s publicly traded.

Sprint already owns Boost Mobile, a youth-focused prepaid MVNO and the firm said that Virgin would be a complementary addition to the portfolio. Virgin, meanwhile, will draw $12.7m in brand licensing fees until the end of 2021.

The politicians sometimes say you can spend your way out of recession and judging by Sprint’s results, that’s what it’s trying to do on an individual basis. Net loss for Q2 this year was $384m, which is $40m more than it was for the same period in 2008. Operating revenues fell ten per cent year on year to $8.1bn.

The company had 48.8 million wireless customers at the end of the second quarter, down from 49.1 million at the end of the first quarter of 2009. This includes 34.4 million postpaid subscribers (25.1 million on CDMA, 8.3 million on iDEN, and one million Power Source users who use both networks), five million prepaid subscribers (4.4 million on iDEN and 600,000 on CDMA) and 9.3 million wholesale and affiliate subscribers, all on CDMA.

A little further North, the Nortel asset strip scuffle was decided this week, with Ericsson winning the bidding war for the Canadian firm’s LTE and CDMA assets with its offer of $1.13. That does not buy the Nortel LTE patent portfolio, though, which is understood to be substantial and which may have been the driver behind compatriot firm Research In Motion’s bid to keep the assets in Canada.

Right, it’s not often the Informer gets to say this so he’s going to enjoy it…

Now for some good news from US vendor Motorola! The firm announced a profit for the second quarter of 2009. The company delivered $26m in net earnings, up from a profit of $4m in the same period last year and a run of losses for the quarters since then. The cost cutting strategies have paid dividends.

Quite how long that will last is another matter, though, as net sales plummeted from $8bn in the second quarter of 2008 to $5.5bn in 2009 as consumers stopped buying handsets and operators bought less kit. Sales at the Mobile Devices segment were $1.8bn, down 45 per cent compared to the year ago quarter. Operating loss was $253m, compared to an operating loss of $346m in the second quarter of 2008, but down from $509 million in the first quarter of 2009.

Motorola shipped 14.8 million handsets over the three month period, giving it an estimated global handset market share of 5.5 per cent. The company is preparing to unveil a raft of Android-based devices starting in the fourth quarter in a bid to revive its handset portfolio.

Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices, said: “We have agreements in place with carriers and remain on track to bring our new smartphone devices to market for the holiday selling season. We are also excited about our 2010 portfolio and are pleased with the customer feedback. In Mobile Devices, we improved the operating loss, reflecting a lower cost structure, and substantially reduced cash consumption as compared to the first quarter.”

The Home and Networks Mobility division recorded sales of $2bn, down 27 per cent compared to the year ago quarter. Operating earnings for networks were $153m, compared to earnings of $245m a year ago.

Finally this week, Microsoft has, after a lengthy pitch of the woo, managed to get itself into Yahoo’s personal space. The two companies this week announced that they will combine their search and advertising experience to take on the might of Google.

Since the collapse of Microsoft’s $45bn offer for Yahoo in 2008, discussion has focused on how else the two giants might combine their strengths. Under the deal announced Wednesday, Microsoft’s Bing search engine will power Yahoo! search while Yahoo will become the exclusive worldwide sales force for both companies’ premium search advertisers.

Recently installed Yahoo CEO Carol Bartz said: “Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities, and mobile experiences.”

But what this deal is really about is Microsoft and Yahoo going up against the search and advertising giant Google, “providing a viable alternative to advertisers…so that advertisers no longer have to rely on one company that dominates more than 70 per cent of all search,” in the words of Microsoft CEO Steve Ballmer, a man who is clearly bothered at a fundamental level by the concept of a monopoly.

And that’s about the size of it this week. The Informer is now taking his summer holidays and will return in September.

Take care and have a good August

The Informer

RIP Sir Bobby

Blyk's Pekka Ala Pietilä

Ad-funded MVNO Blyk announced Monday that it is to wind down its virtual network operation in the UK and reposition itself as a provider of managed services.

It has signed an exclusive deal with Orange in the UK, the carrier that has hosted its MVNO. The announcement came hard on the heels of Blyk’s partnership deal with Vodafone in the Netherlands.

Blyk’s original model relied on revenues from advertising customers being used to subsidise voice and text usage for 16 – 24 year-old end users (or ‘members’ as Blyk prefers to describe them). But, although initial uptake was quicker than the firm had forecast, the service was not a commercial success.

Blyk will cease its MVNO operation at the close of August with some 200,000 end users.

While the firm’s advertising response rates have remained high, at 25 per cent, it lacks the kind of reach that advertisers are used to buying through more established media. And the volume of free usage made available to end users through advertising subsidies was simply insufficient. Earlier this year the firm scrapped its bundle of 217 texts and 43 minutes to a simple £15 credit.

But while the firm has conceded that the MVNO model has not borne fruit, and has adjusted its strategy accordingly, it believes that launching its own operation was a necessary evolutionary stage. The company’s founder, Pekka Ala-Pietilä said that the MVNO model simply didn’t allow the concept to scale

“One of the important conclusions for us is that if we want to seize the opportunity, which seems to be now opening up in a very rapid manner in different markets, we need to have the capability to speed up the rollout,” Ala-Pietilä told telecoms.com. “The MVNO model was resource intensive and time-consuming, because we needed to build up parallel telecoms infrastructure. If you’re partnering  you don’t need to do that. You can go very fast and you can create a mass media. But I don’t believe we could do that if we hadn’t managed to perfect the media model and gain the experience on the advertising side, the technical side or the consumer side by doing everything from the ground up ourselves,” he said.

Ala-Pietilä said he did not believe that Blyk’s experience of operation proved that the concept of subsidising service with advertising was unworkable. Orange, however, will not be making that the centre of the offering it will be launching on the back of this new partnership. Nor will the carrier be focussing exclusively on the youth segment.

“This is the start of a better relationship with our customers,” said Mark Overton, VP of strategy and business performance at Orange UK. “Operators today don’t have much of a relationship with their customers beyond the bill. But this push advertising, and timely, targeted messaging will enable us to give our customers a unique offering.” Overton also cited a strategic initiative the carrier is inking with Barclays Bank and said that a combination of mobile commerce, mobile advertising and location awareness made for a powerful brew. He said the firm will be making a major announcement within the next week.

Blyk’s role as managed service provider will likely require less employees, although Ala-Pietilä said the firm has yet to decide on any rationalisation in the UK, promising announcement in “due course”.

While Orange will continue to run its own sales force, Blyk will be involved in designing campaigns, ensuring content runs correctly on the full range of Orange handsets and interfacing with advertisers and agencies. Overton stressed the process and expertise elements of the offering over the technical.

Neither company would reveal the specified length of the exclusivity deal that gives Orange alone access to the new Blyk offering.