June 5th, 2007

MVNO’s – Not Much New to Say

I’ve been fielding quite a few inquiries around the prospects for MVNO’s in the US. There isn’t a lot “new” to say that we haven’t been writing about for the past couple of years. (OK, except that 80,000 customers not paying is new. See story.) Bottom line is that the majority of mobile subscribers in the US seek quality of coverage and good value. A handful want handset selection and will choose T-Mobile for the Sidekick or Cingular for the iPhone. It’s hard to beat the infrastructure owners (e.g., Verizon, AT&T) on any of these dimensions. This will evolve over time and more consumers will seek differentiators (e.g., entertainment offerings), but for now it’s more important that they are on their friends’ networks.

I don’t believe MVNO’s are “dead” as a lot of journalists have been trying to get me to say. Virgin Mobile just filed to go public on 5/1/07 with close to 4.6 million subs. and over $1B in annual revenue. Yes, their ARPU is less than half the national average, but they’ve leveraged an existing brand and targeted a then underserved market in the US and have done well.

The other challenge facing the MVNO’s who are targeting teens and young adults is that these kids aren’t paying their own bills. Recent research we published showed that about half of 18 to 24 year olds are still on their parents’ plan.

Here are some links to other blogs on MVNO’s:

Amp’d Mobile: From Media to Minutes (05/06) (Blog)

MVNO Math (ESPN Mobile and other MVNO’s)(07/06) (Blog)

Helio Launches (05/06) (Blog)

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