Another MVNO Bites The Dust - InformationWeek

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9/27/2007
04:16 PM
Eric Ogren
Eric Ogren
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Another MVNO Bites The Dust

This time it's Disney's family-centric MVNO that's calling it quits. By the looks of things, it appears as if 2007 is the year of death for MVNOs. Is the MVNO a doomed business model?

This time it's Disney's family-centric MVNO that's calling it quits. By the looks of things, it appears as if 2007 is the year of death for MVNOs. Is the MVNO a doomed business model?I could make snide jokes about the power of The Mouse, but I won't. The truth is, it's sad to see another wireless company fail at making a go of things.

The Walt Disney Co. today announced that it will shut down its Disney MVNO, with operations set to cease on Dec. 31. Current customers can continue their service until that deadline. Disney is working on setting up a reimbursement program for qualifying members, but full details of that have not been released yet.

The MVNO was run by the Walt Disney Internet Group. Based on its recent recommendation to the Walt Disney board, the decision was made to close the venture because of industry competition.

The "MVNO model has proven, as we've seen with other companies this past year, to be a difficult proposition in the hyper-competitive U.S. mobile phone market," said Steve Wadsworth, president of the Walt Disney Internet Group. "In assessing our business model, we decided that changing strategies was a better alternative to pursue profitable growth in the mobile services area."

The Walt Disney Internet Group pitched the idea of licensing out its Family Center suite to other carriers in a manner similar to ESPN's licensing deals. But with two of the four major wireless carriers already offering similar services, Disney might face an uphill battle on that front.

With Amp'd Mobile recently unplugging, and ESPN Mobile whiffing at bat -- both companies with major backers -- it's hard not to question the MVNO business model. Can it really be successful? Helio doesn't seem to be doing that badly (though it is burning through a hell of a lot of cash). Virgin Mobile USA and others have been around for a while. So clearly there is some formula for getting it right. It seems finding that formula is the real key.

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