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article imageVirgin Hopes to Seduce Canada with Mobile Phone Launch

By David Silverberg     Mar 1, 2005 in Technology
TORONTO (Digital Journal) — Today’s publicity stunt by Sir Richard Branson, chairman of Virgin Group and founder of the newly launched Virgin Mobile Canada, could’ve been mistaken for a Hollywood North action scene: Dressed in red tights and padded with faux muscle, Branson flew down a zip wire from the top of a sky-high LCD display, red smoke billowing from his boots. While the popular dance tune “Call Me” blared from several speakers in Dundas Square in downtown Toronto, Branson then climbed aboard a monster truck that “crushed the competition” by driving over three cars labelled “High Rates,” “Completely Confusing Mobile Service Contract” and “Hidden Fees.”
Sir Richard Branson, chairman of Virgin Group, poses with models for the media, and hams it up for the crowd at Virgin Mobile's Canadian launch event in Toronto. — Photo by djc Features
And what’s a Virgin launch without beautiful women? Branson then “freed customers chained in by long-term contracts” by ripping the chains off three statuesque models dressed up as nurses. Acting like the kid his company hopes to attract, Branson flung snow on the models, and laughed so heartily the horde of onlookers and media must’ve thought he won the lottery.
But the savvy businessman, known to couch potatoes from his reality TV show The Rebel Billionaire, doesn’t need luck to enrich his empire. Branson and his Virgin conglomerate hope to reel in cell phone customers in Canada with an approach aimed at the 12- to 34-year-old market. Using a pre-paid model, rather than the long-term contract model adopted by current wireless carriers in Canada, Virgin Mobile Canada partnered with Bell Mobility to “break into markets where customers aren’t getting what they deserve and deliver a better service,” said Branson at a press conference after his high-flying act.
After finding success in the U.S., the U.K. and Australia, Virgin Mobile turned their attention to the Great White North and found a need for customer-friendly pre-paid mobile phone service. “We found absolutely incredulous charges that are unique to Canada,” said Branson. Referring to the obligatory system access fee — priced at $6.95 from most carriers — Branson attacked “a monthly charge just for owning a mobile.”
Virgin Mobile Canada is available in Ontario, Quebec, British Columbia and Alberta. Atlantic Canada and the rest of the country will be covered by the end of the year, Branson said.
Virgin models show off new cell phones at a press event in Toronto. — Photo by djc Features
Virgin Mobile Canada offers three phones ranging from $99 for the Nokia 6015i to $219 for the Audiovox 8910 camera phone. Its pricing plan is a strong competitor to the current deals promoted in the Canadian market: Calls cost 25 cents a minute for the first five minutes each day, then just 15 cents a minute afterward. For a $25 monthly pass, customers pay 20 cents a minute for the five minutes each day, and then 10 cents a minute. The credit lasts 120 days, four times as much as most expiry periods.
Branson stressed how Virgin strays from hidden fees, contracts or bogus fine print. Instead, his company will complement its straight-forward pre-paid approach with a host of “cool stuff” found in the phone’s customized menu: Rescue Ring is a program that allows you to set your phone to ring at a certain time, especially when a bad date begins to ruin your night and you want to get out with a fake phone call; Musictones downloads real tunes from popular artists; and an alarm-clock function uses a funky Rastafarian voice as a wake-up call.
“Customers have told us that they’re sick of the techno-babble and simply want cool services,” said Andrew Black, CEO of Virgin Mobile Canada.
With a concentrated push to attract young cell phone users, Virgin Mobile Canada hopes to attract two million people within two years. The parent company may be renowned for its record stores and airline ventures (and the recent foray into commercial spaceships), but its mobile division is slowly penetrating the market: Virgin Mobile has already won more than 8.5 million customers worldwide and 3 million in the U.S. (although the U.S. numbers represent 1.7 per cent of America’s total market).
In all penetrated markets, including Canada, Virgin Mobile acts as a mobile virtual network operator, or MVNO. This means Virgin piggybacks on someone else’s wireless network, in this case Bell Canada. MVNO’s typically add brand appeal, distribution channels and cross-promotion to further enhance visibility.
“The youth market is ripe for growth,” said Marc Choma, director of communications at the Canadian Wireless Telecommunications Association. “As new technology enters the market, the younger generation is the early adopter and often sets the trend.”
On the appeal of pre-paid plans, Choma said the advantages are numerous; customers are not locked into a contract, and from a parental perspective, teens can learn fiscal responsibility by using their minutes smartly. It practically weans them into a wireless lifestyle, Choma added.
Virgin Mobile is also pushing its marketing efforts onto a youth market by making their phones available in 1,500 stores, including unusual outlets such as Shell, 7-11, Chapters-Indigo and HMV. The latter is particularly surprising: “HMV is Virgin’s biggest competitor in the music business,” Branson said, “and the fact that they are selling our brand tells you a lot about Virgin Mobile.”
It also says a lot about the impact Branson and company will have on young cell phone users fed up with three-year contracts and $100 monthly bills. The unanswered question, though, is still left hanging: Will Virgin Mobile Canada become as cool and bold as their suave celebrity founder?
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