Tuesday, April 04, 2006

Rafat at CTIA: MVNOs Not Hitting Numbers

Rafat, and everyone else, is at CTIA. Here is a quick recap of his conversations with MVNOs.

From the post:

"From the industry insiders I have spoken: Virgin Mobile’s number are flat to dropping (more issues than can be posted here), and then the two new MVNOs Mobile ESPN and Amp’d, from people I have spoken too, are nowhere close to expected.

What gives? Well, for one, there are endemic issues with all sectors of the MVNO market, and competition with incumbents whose lines they are leasing.

Then there is an intractable problem: the U.S. market is at or near saturation, and everyone is locked into a contract. If you can’t get out of a contract, you are not moving to an MVNO just because there is live TV on it."

He points to this article from Telephony Online: "The brand vs. the bottom line"

“Most of the early MVNOs right now are focusing on the sales part of the value chain,” said Ozgur Aytar, senior analyst for Pyramid Research and co-author of the recent report “MVNOs and MVNEs: Analyzing the Potential of Virtual Mobile Players.” Aytar called that group “lighter-side” MVNOs — companies that focus on marketing and sales and outsource all other parts of their operations, including customer relationship management, applications platforms and back-office functions.

“The new guys may be managing not only CRM but also applications platforms and back office,” Aytar said. Though there is additional capital expense involved in owning and operating these platforms, the competitive edge the MVNOs believe they gain could pay off in higher ARPU, stronger customer loyalty or greater service efficiency.

“Potentially, they could evolve to become network operators,” Aytar said. “It depends on how much they can resonate in their market segments.” She said that she has talked to an MVNO in Finland that said, ‘After you gain 20% of your target market, it really doesn't make sense anymore not to own your own infrastructure.’ This company started by buying their own switches, though eventually, the company itself got acquired.”

See also:
Mobile TV MNOs May Miss the Boat

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