updated 01:45 pm EDT, Fri June 20, 2008
Helio May Close Stores
The mobile virtual network operator (MVNO) market in the US may be on the verge of collapse with Helio about to scale back or shut down entirely, according to a rumor circulated by Engadget. The provider is allegedly telling store managers that it will shut down at least some of its retail shops in possible preparation for a takeover by Virgin Mobile. No information has yet appeared to suggest that Helio is withdrawing support for the service itself.
It also remains uncertain as to whether any potential shutdown will allow Helio users to have their phones re-locked or unlocked to work with Virgin's service, or if customers will also have an opt-out clause should they decide to require another platform.
While the latest move isn't confirmed, Virgin Mobile has previously said it has been involved in talks with Helio's majority investor SK Telecom over the possibility of "strategic" deals that are widely believed to involve Virgin assuming control of Helio and potentially putting an end to the brand altogether. Korea-based SK Telecom has officially denied talks but also said it has been investigating chances to improve its business in the US.
The US market for MVNOs has rapidly contracted in the past year and has seen the closure of one-time Helio rival Amp'd Mobile and financial troubles at Qwest, pointing to a rapid contraction of the market for non-native carriers in the US. In addition to being overshadowed by larger and more established carriers, most MVNOs have to purchase airtime from Sprint and other incumbents that often boosts pricing higher than for larger competitors.