Zed ahead

The growth of the wireless Internet has compelled Finnish wireless operator Sonera to break into the U.S. wireless market. Sonera gained substantial experience offering wireless Internet services in Finland and other European countries. Last fall, the operator realized it could combine its expertise in mobile communications and the Internet and create a wireless portal, then share that knowledge with other operators to increase its own bottom line.

The company formed Sonera Zed in October 1999 and struck relationships with several operators in Europe before teaming with U.S.-based Powertel. Together, the operators will fine-tune their wireless Internet strategies and find out how Sonera's wireless Internet portal, Zed, appeals to consumers.

Zed services, which include information-related services, mobile commerce, mobile chatting, Zed finder and Zed travel, are available via short message service text messages and Wireless Application Protocol technology (see box).

Partnering with Powertel is a tactical move for Sonera Zed. Sonera owns about 12% of Powertel, a stake it held prior to its wireless Internet initiative. That relationship could blossom into a merger if Sonera wants a stronger tie to the U.S. wireless market.

Powertel offers its own wireless Internet portal, My Powertel, but the Zed alliance will give Powertel's customers access to more services. The Powertel and Sonera Zed relationship is unlike that of other content provider partnerships, said Paul Hanna, vice president of new business opportunities for Powertel.

"We are strategic partners that are working to realize both companies' wireless data strategies," Hanna said. "We are Sonera's first U.S. commercial launch, and they agree we bring a lot of American perspective to what is sound."

Where Powertel can offer additional services, Sonera gets additional revenue streams. My Powertel will lead customers who want wireless Internet services to a branded portal such as Zed if the customer uses any of the Zed services, Sonera and Powertel will share the revenue, Hanna said.

Hanna did not divulge specific revenue structures, but a transaction-based model is likely, said Paul Hughes, vice president of business development for Sonera Zed.

Though customers will access Zed content via My Powertel, Sonera Zed won't relinquish its brand. "We have the global expertise and resources to be a leading brand," Hughes said. "We hope to help others and help advance the wireless Internet space."

Sonera is taking a page from the cable industry, he said, where branded channels are offered through local cable companies. "HBO and Disney built brands without taking away the image of a cable operator," Hughes said. He envisions that consumers will request wireless Internet offerings by name.

While the Zed offerings are similar to other wireless portal offerings, Hanna argues that Sonera's experience distinguishes it from other operators.

"Their uniqueness lies in the fact that they have been doing this for a long time," he said. "Sonera will win [in this market] because they have a huge organization behind Zed, which is new, and the company has processes in place for product innovation."

One of Sonera's strategies is to determine what is popular. "They quickly learn what [services] customers like and what they are using," Hanna said. Armed with that information, carriers can create service tracks for targeted user groups.

Sonera has keyed into a niche market. "It is not easy to get wireless Internet services off the ground, and many operators are going through the stages of trials and errors," said Naqi Jaffery, an analyst with Dataquest.

Sonera Zed wants to help carriers offer unique services, Hughes said. "It is incumbent on carriers to figure out how to offer spectacular service [offerings] because they cannot just be in the game without having a focus on customer intimacy," he said.