Mobile Wallets in America

Also from MobileCrunch, more talk about using mobile phones as payment systems.

From the post:

"In-Stat predicts that as many as 25 million Americans will be carrying Mobile Wallets - that is mobile phones that have payment functionality to supplant a conventional wallet - by 2011.

My prediction is that this report under-shoots the mark substantially and that some move by a third party, be it a Yahoo or Google or an MVNO out to distinguish themselves will come up with a very solid program and get a large group - MySpace Users Anyone? - forgive the pun “excited” about having a mobile wallet in their pockets."

From In-Stat:

"Recent research by In-Stat found the following:

• According to an In-Stat consumer survey, attitudes of US users towards mobile wallets are at best, lukewarm, with roughly one-third of respondents interested, one-third indifferent, and one-third uninterested.
• The most frequently mentioned barrier to the mobile wallet is added fees for its use (72% of respondents), followed by security concerns about loss of the phone and privacy.
  
• Survey data found that mobile wallet was most appealing to technology innovators and early adopters as well as subscribers who already rely heavily on their wireless phones."

More on Mobile Payment:
FeliCa Opens the Door
Russell Finds FeliCa
FeliCa on Rails
FeliCa in the Wild
FeliCA Survey
Motorola's M-Wallet
NFC at Giants Stadium
More NFC Payment Talk
Noikia NFC Phones
2006: All About NFC
iPod Payment Terminal
Near Field Payment Comes to Atlanta

Alltel's My Circle Plan

MobileCrunch reviews Alltel's latest pricing plan called "My Circle."

From the post:

"By offering unlimited free calls to ten pre-selected numbers with their new “My Circle” plan, Alltel hopes to increase ARPU and offset off-net settlement charges resulting in overall improved profits off of their voice customers.

Personally I think this is the first salvo in a skirmish that is going to end with flat fee calling plans that are, much like data, basically “all you can eat”. It wouldn’t surprise me to see one of the upstart MVNO’s jump into the fray with a $99 or $149 truly unlimited plan."

Amp'd Closes $150 Million Round

From MocoNews:

"Amp’d Mobile, the MVNO, has closed what is probably the biggest digital media venture funding for the last year or so…the third round closed at $150 million, ending some weeks of speculation.

The round featured participation from several new investors, including Tudor Investments, Intel Capital, Rho Ventures, Qualcomm, Quilvest Ventures, Polygon Investment Partners and Heights Capital Management. All previous investors, which include MTV, Universal Music Group, Highland Capital Partners, Columbia Capital and Redpoint Ventures, also participated in the round.

In total, the company has raised close to $250 million to date…
For everything Amp’d, read our dedicated company section, here"

From the TMCnet article:

"We are thrilled to receive enthusiastic support from leading technology companies such as Intel Capital and Qualcomm, as well as such highly-respected global investment entities as Tudor, Heights, Polygon, Quilvest and Rho," stated Adderton. "This is a significant milestone that will allow us to quickly ramp up Amp'd Mobile and fulfill our goal of delivering a completely unique, broadband wireless experience."

"Mobile industry is evolving from traditional voice and text services to richer entertainment services such as video," said Sriram Viswanathan, Vice President Intel Capital. "Intel Capital will work closely with Amp'd Mobile on this evolution on mobile platforms."

NTL and Virgin Mobile

NTL is buying Virgin Mobile.

From Yahoo News:

"UK cable company NTL has agreed to buy Virgin Mobile in a deal that could be worth up to 984.9 million pounds ($1.7 billion), creating a "quadruple-play" mobile, fixed-line, broadband and TV service under the Virgin brand."

"This deal has taken a long time to come through. Considering that Virgin Mobile's board has backed it, the minorities should have no problem accepting it," said Damien Chew, analyst at ING Financial Markets."

More data points from Rafat:

• "Virgin Mobile is the UK’s largest MVNO with more than 4.3 million customers.
• After the acquisition of Virgin Mobile, would be the fifth largest provider of mobile telephony in UK
• The Brand Licence also permits ntl to rename its ultimate public holding company with a name that includes the Virgin name.
• Virgin Mobile will retain its existing brand and will continue to be based in the UK.
• Virgin Mobile’s operating business will continue to be led by members of Virgin Mobile’s current management team, and it is intended that a marketing director from Virgin will join ntl, bringing Virgin’s brand expertise to the ntl management team.
• The Brand Licence is for a 30 year period, although ntl may terminate it at the end of the tenth year of that period on one year’s notice.
• NTL also expects to benefit from Virgin Mobile’s high street presence (which includes over 100 “stores within stores” in Virgin Megastores and WH Smith stores, through which it intends to sell other ntl products)."

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

Embarqing on a MVNO

Via TechDirt, Sprint's new spin off, Embarq, will also offer a MVNO.

From RCR News:

"Sprint Nextel Corp.’s local phone service spin-off, Embarq, plans to launch a mobile virtual network operator later this year, according to Embarq’s chief executive officer-to-be, Dan Hesse.

Hesse told attendees during a keynote address at the TelecomNext conference of Embarq’s MVNO intentions, which he said would include dual-mode devices that would allow customers to seamlessly roam between wide area and local area wireless networks. Similar plans were announced by cable companies looking to launch wireless services using Sprint Nextel’s network."

From TechDirt:

"Obviously there's a trend among global telecom providers to divest themselves of legacy voice-centric phone networks, but why, then, have the fixed-line company -- which has been spun out -- offer the branded wireless service? Shouldn't the remaining wireless company resell wired service if the bundle is so important? Indeed this is the strategy Vodafone is pursuing. The Embarq news is also reminiscent of when AT&T flipped out after they took AT&T Wireless public and grabbed the IPO money, then realized they were let out of the wireless business. Shouldn't they think through these things a little more before they spin these things off only to put them back together in some way?"

Earthlink's Helio Funding

MocoNews reads 10ks so you don't have to!

From the post:

"The Earthlink and SK Telecom joint venture MVNO, Helio, has about $121.5 million pumped into it from Earthlink side by now, according to the Earthlink annual report (10-K) filed with SEC this week.

“We invested $43.0 million of cash and contributed non-cash assets valued at $40.0 million upon completing the formation of HELIO in March 2005, invested $39.0 million of cash in August 2005, invested $39.5 million of cash in February 2006 and have committed to invest additional cash of $58.5 million in HELIO at various dates through August 2007.”

And this you may not know: Helio already has subscribers, even though the service hassn’t yet launched: “Effective March 24, 2005, we transferred approximately 27,000 wireless subscribers to HELIO in connection with completing the formation of HELIO.” This, I assume, is from Earthlink Wireless…"

Aina Group and Nokia Create MVNO

Another MVNO but this time with a twist.

From the press release:

"Aina Group is involved in both the media and fixed and mobile operator businesses and its proactive concept responds to the challenges the traditional media and the ICT industry are facing. Aina's media-based virtual service operator concept generates revenues not only for operators, but for media companies as well. Aina Group offers personalized services for niche consumer segments, such as newspaper subscribers, on regional basis, and solutions for enterprise and public sector customers in Finland.

"Aina has a unique regional MVNO business concept with links to media, consumers, and enterprises. We differentiate ourselves from other operators with customized service offering," says Jaakko Nevanlinna, CEO, Aina Group. "The readers of the local newspaper will benefit from our Armas GSM subscription that offers mobile services such as news, events, directories, weather and special offers from local shops."

MVNO: Analyzing the Viability

Om has some information on an expensive research report from Pyramid Research on MVNOs.

From the post:

“MVNOs and MVNEs: Analyzing the Viability of Virtual Mobile Players.”

• Virgin Mobile UK is profitable, but the company has been in operation since 1999.
• Tracfone has been in the market for a few years and sees EBITDA margins at around 10–15 percent.
• Telmore, a low-cost MVNOs, had even lower EBITDA margins at YE2004.

Their data shows that MVNOs account for 2.75% of the total world’s mobile users and is projected to rise to 3.3% by 2010, reaching more than 100 million subscribers.

Pyramid found that most MVNOs are loss-making to slightly above break-even and believes that there is enough fodder to question the MVNO model, at least in its first iterations. Pyramid concludes that not all MVNOs will achieve profitability and the next 24 months will either make or break MVNOs, particularly the prepaid-focused ones."

Earthlink in the News

With the new partnership for Muni Wireless and the Helio deal there is a lot of chatter about Earthlink's future. The joint Earthlink Google SF bid is online too.

From Om:

"Like America Online, Earthlink has been in a desperate fight to make itself over, using any and every broadband technology. Broadband over powerlines, Fixed Wireless, MuniWireless, Broadband MVNO, and Voice over IP - anything to get off its dependency on incumbent - DSL or cable - access pipes.

Earthlink is currently planning WiFi networks in five cities, and the total cost of building networks in these cities will be in the $50 million range, according to informed industry insiders. Municipal Wireless is the easiest way for Earthlink to get out from under the yoke of large incumbents, and it has no option but to aggressively chase these opportunities. And to turn it into a viable business, many think the company needs to play in at least 20 cities, including some NFL towns.

It certainly has past history of spinning out businesses. Helio, their MVNO was spun-out and has received backing from SK Telecom of South Korea. So why not Muni Wireless Business? In recent days I have heard fleeting rumors about Earthlink spinning off the muniwireless business as a separate entity, including an investment from a big investment bank."

From Techdirt:

"This leads to Om's prediction that the company will spin off the muni-WiFi efforts, to see if it can be valued at a higher rate. This is the type of thing that could make sense from the Wall St. point of view where they seem to hate businesses that have multiple lines that are valued very differently. It's part of what leads to the "build 'em up, break 'em down" mentality of Wall Street (who, of course, gets fees at each step of the process).

However, as we discussed in that link, these types of deals may be good for shareholders in the short-term, but kill off much of the strategic value for companies in the long term. Where it makes sense for a company trying to transition its business to invest in separate lines, Wall Street doesn't seem to have the patience to understand that this actually does make sense, and would rather break things up and set them afloat alone immediately."

Nokia UMA

Carlo at MobHappy discusses Nokia's push for UMA.

From the post:

"There’s little doubt that UMA will be a disruptive force in the mobile telecom industry. It promises to meld the benefits of fixed or PC-based VoIP with those of mobile telephony. But why it’s so compelling for Nokia is that it gives them an opportunity to expand their pool of customers beyond just mobile operators. Sure, they go on about how mobile operators can leverage all their assets and plenty of other buzzphrases, saying UMA lets them boost network coverage and reduce costs as well as introduce new services. But it also gives plenty of companies that want to get into the mobile space a foothold — companies like cable operators, fixed-line companies, even strong Internet brands.

For someone like a cable operator, an MVNO using its own networks for UMA backhaul is a pretty compelling proposition. A fixed operator can offer a similar network, and for a diversified telecoms company, like France Telecom — say with its Wanadoo ISP and Orange mobile network in the UK — it makes even more sense. The telecoms infrastructure market is slowly melding fixed and mobile; for consumers this mix will happen even more quickly. By seizing on UMA, Nokia can expand outside its traditional networks sales area, and grow its carrier customer base."

iCell MVNO

Via Slashdot, this ars technica article talks about a recent trademark registered by Apple and how it points to a cell phone product.

From the article:

"Last week, Apple filed four applications with the US Patent and Trademark Office for the term "Mobile Me." According to the filings, Mobile Me relates to a number of goods and services, including "telecommunication services for the dissemination of information by mobile telephone, namely the transmission of data to mobile telephones" along with "music players," "digital video players," "MP3 players," and "software related thereto."

Getting into the cellular services business is easier these days, thanks to the likes of Sprint, T-Mobile, Verizon, Cingular, and their support for Mobile Virtual Network Operators (MVNO). An MVNO is a company that leases bandwidth, infrastructure, and time from a carrier and then rebrands and resells it. The best-known MVNO in the US is arguably Virgin Mobile, which also operates on Sprint's network.

As this would fall into the category of "unannounced products," we don't expect Apple will have much to say about "Mobile Me." But don't be surprised if there's another special event in the next couple of months. After all, Jobs concluded his Macworld keynote with "see you soon."

MVNO mania

MocoNews has a number of MVNO links up today.

The first is a report called "MVNOs - The Good, the Bad and the Ugly." (PDF) From the report summary: "We distinguish seven grades of MVNO, and seven levels of segment-specific value-added they can bring, leading to at least 49 business models."

The second is an article by Bruce Meyerson called "A phone of their own." From the article: "JupiterResearch estimates that a virtual cell brand needs from 300,000 to 500,000 subscribers to be financially viable."

And finally one from the Red Herring on Amp'd's launch. The quote: “When we began this company, partnering with MTV Networks was our No. 1 goal, not only because of their unrivaled understanding of today’s young adults, but also because we share the same goal of delivering the most original and compelling content across the rapidly evolving wireless space,” said Mr. Adderton.

A few facts from the article:

• MVNO start-up costs: Virgin - $500m, Helio - $440m Amp'd - $300m
• According to the Yankee Group the global MVNO market will be $10.7b by 2010

Other Red Herring recent MVNO articles:

• Cell Firms Woo Gays, Pot Heads
• Q&A: Amp'd's Peter Adderton
• Helio Rises to Mobile Test

Amp'd gets MTV

From MocoNews, Amp'd gets 50m from MTV:

"It is investing $50 million in the much-hyped “edgy” mobile service Amp’d…this comes after MTV itself toyed around with the idea of launching its own MVNO, and decided it was too much of a financial and operational effort and risk, at least in U.S. And to add some perspective, being an MVNO is as cash intensive as you can get: Amp’d already had $67 million in funding and is in the process of raising an additional $100 million financing, according to CEO Peter Adderton, who believes the current round will be the last private financing round."

The other big announcement from MTV is that it is creating an "iTunes" product with MSFT:

"The service, dubbed URGE, will be integrated into the next version of the software maker's Windows Media Player and offer more than 2 million tracks for sale individually or as part of a subscription package.The service, dubbed URGE, will be integrated into the next version of the software maker's Windows Media Player and offer more than 2 million tracks for sale individually or as part of a subscription package."

I assume these two will go together.

OM Malik on MVNOs

More news and reviews coming out about MVNOs and in particular the exodus going on at Amp'd. Om Malik has a great extended post that echoes many of my thoughts.

1) The space is crowded: with three announced, ESPN, Amp'd, and Helio all going after the same audience - and Voce trying to lock up the high end, there are a lot of companies competing for what is essentially carrier over flow. Om quotes Matthew Maier, from a Business 2.0 article from August, "When a carrier like Verizon Wireless or Sprint decides to lease its network to a third party to set up an MVNO, it's doing so because it wants to reach markets it could not otherwise touch."

2) Its expensive: Om quotes "Sky Dayton, the chief executive of Helio, which has substantially deep pockets told me that in the MVNO game, the table stakes are at least half a billion dollars." I have also heard that number used before.

Its going to be a tough road.

Amp'd - three top players out, more to follow?

From MocoNews.net:

• Don McGuire, who was the CMO, had left, though I’m not sure for where.
• Steve Stanford, who was the first marketing head at Amp’d, left to join the luxury MVNO Voce, as the CEO.
• Stephanie Henning, who headed Amp’d music and entertainment group also left and has joined Fox

Catch up Post

Take a few days off and wow.

• Sprint signs content deals with everyone
• Voce announcing high end MVNO: For a $1500 sign up fee and $500 per month, Voce will offer their subscribers unlimited voice and data, personalized live service, and new, exclusive handsets every 4 months.
• Facebook signs (?) a deal with Amp'd
• Oliver Starr talks about the potential for Phonevertising by Google
• Russell Buckley describes a really cool LBS that I have been thinking about called Digital Graffiti.

“Try not to die. Amp’d Mobile is coming.”

That's the tagline form the upcoming Amp'd Mobile campaign to begin running in print magazines in December. The target demo for Amp'd is 18-34 year olds. Amp'd site hasn't changed from the long loading, hard to use interface they have been sporting for several months but now it seems like the main navigation is available without watching a video - it just crashed my browser as I was on the way to the Press Release section - typically a great place to use heavy lifting Shockwave technology.

From a press release on the Taxi website Amp'd is going to allow 5-10 second ads on the phones in a space that takes up 1/4 to 1/2 of the screen. I guess that was inevitable.

I think MVNO new brands are going to have a hard time - even with cool content. I like the devices and I am sure there will be some good reasons to go with them but I don't know about the above mentioned Ad campaign. I would lead with sex over death.

Top 10 Global Wireless Predictions for 2006

inCode released this report a few days ago but I just saw it. Here are the highlights they pull:

• A digital music innovator will launch a Mobile Virtual Network Operator (MVNO) focused on mobile entertainment services
• Consumers will "“snack"” on mobile TV, which will not be a killer application
• A new business model for voice services will emerge, based on mobile Voice-over-Internet Protocol (VoIP)
• At least one major network operator will abandon its retail brand and use wholesale access as an innovative business strategy
• China will become a telecommunications leader, and Chinese investors may buy a controlling interest in a wireless company

Helio

Another MVNO enters the market today. Helio has been announced all over the place. In general I think that MVNOs are going to be hard to create from scratch.

While I was at CTIA last month I saw the Amp'd device and it looked really good. I saw the Amp'd CEO, Peter Adderton, speak on a panel with Cingular and Verizon executives and after throwing out a couple of "you guys are so old/slow" comments, the Cingular guy said, "we know we are not content people and that's why we are partnering with the best content creators to deliver the best possible experience for our users. I hear you are starting you're own studio, good luck with that."

Kind of my thoughts about creating a brand new brand MVNO. By the way - its been a long time since I saw a website that we so incredibly hard to use as the Amp'd site. Do I really have to sit through a video clip to get to the main menu - well, yes, I do.