What Is The Real Market For Wireless MVNOs? - InformationWeek

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Commentary
5/30/2007
10:42 AM
Stephen Wellman
Stephen Wellman
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What Is The Real Market For Wireless MVNOs?

The wireless industry has been trying to figure out the secret to MVNOs for the last five years. With the exception of Virgin Mobile, though, I haven't seen very many success stories. Now Voce, a new MVNO designed for the busy professional with disposable income, is trying to capture the coveted high-end market. Why do MVNOs think wealthy people want to go through a re-seller?

The wireless industry has been trying to figure out the secret to MVNOs for the last five years. With the exception of Virgin Mobile, though, I haven't seen very many success stories. Now Voce, a new MVNO designed for the busy professional with disposable income, is trying to capture the coveted high-end market. Why do MVNOs think wealthy people want to go through a re-seller?I think Voce has a number of issues. First, it's a high-end MVNO that doesn't stress mobile data. Instead, it stresses convenience -- highly customized and attentive customer care -- and voice. Sure, I'd love to have infinitely insured mobile devices and all the handholding in the world, but I wouldn't pay $200 a month for it, even if I could afford it. Plus, if I am a busy professional with disposable income, my biggest concern isn't going to be voice, it's going to be data and, in particular, it's going to be data on my BlackBerry smartphone. I don't know too many busy professionals these days who aren't CrackBerry junkies, do you? And I certainly don't know too many who would kick down $200 a month for a voice-centric service plan.

And what about great customer service? The most affordable carrier in the U.S., T-Mobile, has great customer service and they're a lot cheaper than $200 a month. And with handset rental insurance and unlimited texting plans, I don't really see what Voce has to offer for the money.

Helio, another high-end MVNO, at least gets the data angle. They stress 3G access and a variety of chic smartphones. Helio even has come compelling mobile applications, like MySpace and Google Maps. But, I don't really see what I get out Helio that I can't get directly from Verizon, AT&T, Sprint, or T-Mobile on my own.

Here is my macropoint. If I am coveted professional with disposable income, all the major carriers are going to go out of their way to court me as a customer. And I won't need an MVNO to give me better customer service or a richer 3G data experience.

The real market for MVNOs has always been the prepaid market. Virgin got this from the beginning. Virgin Mobile does a great job of targeting affordable, prepaid mobile service that looks hip at high school and college kids and they've built a successful international business. Carriers don't like prepaid service -- the ARPU financial model, in a sense, punishes them for it -- and they are quite happy to offload it to someone else. And as Virgin has proven, there is money to be made in prepaid. If other MVNOs hope to replicate Virgin's success, I advise them to go after prepaid and leave the high-end customers to the carriers.

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