EarthLink founder Sky Dayton said he's stepping down as CEO of Helio, a move that appears to be part of the plan to reduce EarthLink's position in the mobile company.

Dayton will become chairman of Helio's board and Wonhee Sull, formerly Helio's president and COO, will take on the role of CEO. Sull was chief operations officer at the founding of Helio and before that worked for SK Telecom, which launched the mobile venture in a 50-50 partnership with EarthLink in 2006.

A combination of market dynamics and challenges at EarthLink have recently led to changes in the Helio partnership. In November, EarthLink said it would reduce its ownership in Helio to about 22 percent, as part of an announcement of a new SK Telecom investment in the venture. At the time, EarthLink said it wasn't expecting to invest any more in Helio and that SK Telecom would take over operating control of the joint venture.

EarthLink has been struggling as its traditional customer base of dial-up subscribers continues to shrink. It is working through a restructuring aimed at reversing its losses, including putting its municipal Wi-Fi plans on hold and cutting back on sales and marketing spending.

Beyond EarthLink's troubles, Helio faces a challenging market. Mobile providers that don't own their own networks, like Helio, have struggled recently. Amp'd, a similar company geared toward young mobile users, filed for bankruptcy protection and put itself up for sale in the middle of last year, but ultimately shut down. ESPN Mobile and Disney Mobile have suffered similar fates.

Even though Helio has big-spending users and plenty of cash, EarthLink expects the company to report a year-end loss for 2007 of as much as US$360 million on revenue of as much as $170 million. That’s after SK Telecom and EarthLink started the company with a combined $440 million. Since then, both companies have made additional investments.

Helio has almost 200,000 subscribers who beat industry averages by some metrics, the company said. On average, Helio users spend more than $85 per month, compared with an industry average of $50, Helio said. In addition, Helio customers send an average of 550 text messages per month, and 95 percent of Helio users access the Web from their phones, according to the company.

The IDG News Service is a Network World affiliate.