MVNO madness is nearing fever pitch as companies outside the traditional wireless space contemplate whether they too should start selling wireless telephony as a commodity. Can P. Diddy really become a mobile virtual network operator? Would that be a smart move for him? For the industry?
Who knows. Not everyone is going to be successful. Besides procuring distribution arrangements and customer-service support, MVNOs must offer fair prices and (more importantly) something customers think they can’t get somewhere else. Traditional telecom companies in rural areas likely are watching Qwest Communications International Inc. closely right now. Why? Because Qwest is the nation’s fourth-largest MVNO. The Bell operating company added 1,000 people to its wireless roster in the second quarter and now counts 750,000 wireless subscribers. It was the first time in more than two years that the carrier added customers.
Wired telephone providers are eyeing the wireless industry as a potential growth business because more people are cutting the cord. Those wired operators either can become MVNOs or offer a new technology like WiMAX to gain a wireless element.
Qwest differentiates itself from other wireless providers in one distinct way: The company offers one-number dialing. Thus, a Qwest customer’s cell-phone number also can be his home phone number. If the mobile is on, the customer’s wireless number rings first, and if there is no answer, the call rings through to the home phone. The service also can be turned off. There are advantages and drawbacks to this service. I’ve thought I was calling my neighbor who has the service at home, only to reach her while she was running errands. It’s not easy to ask to borrow a cup of sugar this way. I’ve also thought I was calling someone at home, only to reach her son at the mall. On the other hand, the one-number feature certainly appeals to a certain segment of the population, especially people who want the benefits of cutting the cord but aren’t ready completely to take the plunge.
The questions with upcoming MVNOs are how much differentiation can there be and which differentiators result in high-revenue customers? I suspect if Verizon Wireless or Cingular Wireless L.L.C. thought one-number features were the killer app, they would both offer such services with their landline counterparts.
Perhaps the formula for a successful MVNO is not one application or one differentiator, but the right combination of features, products, services and branding.
