The company will reportedly lease network time and bandwidth from Japanese wireless carrier NTT DoCoMo and become a mobile virtual network operator (MVNO). In order to develop a strong brand, Nokia is expected to debut the service with high-end handsets.
Japan may be a tough market to crack, as it is full of strong homegrown competitors like Matsushita, NEC, and Sharp. Japan is widely considered the most advanced handset market, as customers are accustomed to being able to use their mobile phones to pay for products, read comics, watch television, and other services.
Additionally, the recent history of MVNOs isn't very promising. In the United States, a slew of MVNOs targeting specific demographics have been introduced and failed in the last few years. Small companies like Amp'd and Voce may have been doomed from the start, but even companies with high brand awareness like ESPN failed in the cell phone service business. Virgin Mobile has been a success with its low-cost service though, and it recently purchased defunct MVNO Helio for $39 million.
If Nokia does launch a wireless service, it will be the latest example of the company expanding beyond just making cell phones. CEO Olli-Pekka Kallasvuo told InformationWeek the company is branching out to offer additional services such as multimedia, navigation, and gaming in order to draw more customers to Nokia handsets.