Protective parents: Gold for cellular services?

Disney's new mobile phone service for kids and their parents highlights an important market for the cell phone industry.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
5 min read
LAS VEGAS--You might think kids are too young for cell phones, but your mobile operator doesn't. Services catering to the under-14 age group and their parents could be the next big driver of growth in the cell phone industry.

While cell phone penetration rates are high among the U.S. population as a whole--roughly 69 percent--there is still plenty of opportunity in selling phones to kids. According to George Grobar, general manager of Disney Mobile, cell phone penetration among about 24 million children between the ages of 10 and 14 in America is only 24 percent.

Charles Golvin, an analyst at Forrester Research, said the family market has solid potential: "Families will definitely be a meaningful market for mobile operators. There are some parents who want their kids to have cell phones for emergencies but aren't comfortable giving their kids a phone with no limits or restrictions."

For years, the major U.S. mobile operators have been selling family plans that let parents share buckets of cell phone minutes with other family members. And this segment of the market has been growing recently, said Clay Owen, a spokesman for Cingular Wireless.

So it's not very surprising that Disney, the omnipresent family entertainment brand, would target kids and their parents for a new cellular service, called Disney Mobile, which will launch in June.

Disney hasn't built its own cellular network but is instead leasing capacity from Sprint Nextel. This arrangement, often referred to as a mobile virtual network operator, or MVNO, setup, is a growing trend in the cell phone industry.

Unlike the family plans offered by the big carriers, Disney Mobile gives parents more power over how and when their children use mobile services.

"Today's plans from the big carriers don't address parental control issues," said Parry Aftab, executive director of WiredSafety, an advocacy group of Wired Kids for parental control of Web usage. "There are a lot of parents who want their kids to have cell phones so they can get in touch with them when they need them, but many of them have been holding off buying them phones because they don't feel comfortable."

The Disney service was designed specifically for parents who want their kids to have cell phones for safety and convenience reasons but are either afraid of what their kids might do with the phones or are concerned about getting surprised at the end of the month with a huge cell phone bill.

Disney has created a call control center that can be accessed either on the parents' handsets or from a Web site on a PC to allow parents to set up a monthly allowance of voice minutes, text messages or other services for each child. Alerts are sent to parents and kids when the limit is reached, allowing parents to either increase the allowance or restrict the phone's use. Unlike prepaid phone service, the Disney service offers exceptions to imposed limits on available minutes so that even when a limit is reached, kids are able to call Mom and Dad or reach 911 in case of an emergency.

Parents can also restrict kids from using certain services and designate when other services can be used. In addition, parents can limit which numbers can be dialed as well as restrict certain numbers from ringing on the phone. By way of Global Positioning System technology, parents can even pinpoint the location of their child's handset on a map. There's also an alert function that sends priority messages among family members.

Aftab said parents interested in a service such as Disney's are the same ones who put their home computers in the living room or family room so they can monitor what content their kids access online.

"(Your kids) could be downloading ring tones of orgasm sounds, for all you know."
--Parry Aftab, executive director, WiredSafety

"Once your kid leaves the house, you have no idea what he or she is doing with (the) cell phone," she said. "They could be downloading ring tones of orgasm sounds, for all you know. Or maybe they're being bullied by another kid through text messages. Disney is the first company to address these concerns."

While large carriers may not offer as comprehensive a service as Disney's, they have still been working to address parents' concerns. Cingular's Owen said parents are able to request that certain services, such as text messaging or Web browsing, be turned off on one or more of the phones in their family plan. Parents can also check minutes and usage for each phone in the plan online or from their handsets.

"We're constantly looking to improve all of our services," Owen said. "And it's definitely an area we're looking into."

Cingular and Verizon Wireless also offer controlled-use mini cell phones for the under-10 set. These gadgets are designed to let parents manage costs and the calls their kids make and receive while remaining connected.

Cingular's FireFly phone has buttons for preprogrammed phone numbers for Mom and Dad, along with a button for 911 emergencies. Up to 20 additional numbers can also be programmed into the phone. Verizon's Migo phone from LG also offers a dedicated emergency button, along with four buttons that parents can program.

Even though the big carriers' services and phones don't match the functionality of newcomer Disney Mobile, they still may have an edge over Disney. For one, most parents who'd even consider buying a cell phone for their kids are already customers of one of the big cell phone companies. It might be easier and more cost-effective for them to wait for new features to be added to their current provider's packages.

"Disney's offering is more comprehensive, in terms of parental control, than anything else I've seen on the market," said Julie Ask, an analyst at JupiterResearch. "But whether or not large numbers of parents subscribe to the Disney service may depend on pricing and the value of the services."

Disney hasn't yet announced its mobile service's pricing details. Cingular and Verizon offer entry-level packages that include free mobile-to-mobile calling, as well as free nights and weekends, for $60 and $70 per month, respectively. These services include two phone lines, and additional lines can be added for $9.99 each.