Consumer-side mobile virtual network operators that still want to get in on the game could be out of luck, but there are opportunities ahead on the business side and in serving the machine-to-machine space.
John Caddell, vice president and general manager of mobile virtual network enabler MVNGo, said that there are about 63 MVNOs that are “planned, rumored or active” in the United States. Most of those MVNOs are focused on the consumer space, with plays targeting children (Firefly Mobile) and tech-savvy youth (Amp’d Mobile Inc., Helio L.L.C.) to sports fanatics (Mobile ESPN L.L.C.) and the ultra-wealthy (Voce L.L.C.).
Today about 13 million mobile-phone users get cellular service through MVNOs-less than 10 percent of the market, according to research from the Yankee Group, which hosted an online webinar on the MVNO space last week. The industry analyst firm expects that number to more than double by 2010 to about 29 million subscribers.
Sprint Nextel Corp. has the largest share of MVNO customers at about 38 percent, followed by Cingular Wireless L.L.C. with 36 percent (driven mostly by Tracfone Wireless Inc.) and Verizon Wireless.
Yankee Group wireless analyst Marina Amoroso noted that while the firm expects the MVNO market to end up with around six “Tier 1” MVNOs with at least 1 million customers each, some of those slots are already filled by players such as Virgin Mobile USA L.L.C., Boost Mobile L.L.C.-which is a subsidiary of Sprint Nextel-and Tracfone. Most of the room in the market, then, is in smaller-scale MVNOs.
Consumer plays by MVNOs would have to focus on markets that are not already highly penetrated, such as a play that appeals to children, like the Firefly, or an MVNO targeting the elderly, Caddell said. Another option is to target affinity groups, but most of them aren’t large enough to become a viable customer base-which Caddell pegged at about 40,000 to 50,000 subscribers for a postpaid MVNO, and at least 75,000 users for a prepaid MVNO.
Amoroso warned that since most of the current MVNOs are targeting churners from the national carriers, they’ll probably have to wait a while to pick up substantial numbers of customers. Other challenges facing consumer-oriented MVNOs include getting unique handsets approved for use on carriers’ networks, and working out an effective distribution network.
But there are opportunities for MVNOs beyond the consumer space, he said-such as an MVNO that focuses on the ability of a mobile device to contribute to patient care, since people carry their cell phones with them nearly everywhere. Another area where MVNOs might play in a new space is convergence between wireless, wireline and Wi-Fi.
One overlooked MVNO that is rarely considered to be one, Caddell noted, is General Motors’ OnStar service, which can be built in to more than 50 vehicle models and enables drivers to dial into a service center at the touch of a button and receive turn-by-turn driving directions, emergency assistance or remote vehicle diagnostics. OnStar runs on Verizon Wireless’ network and has the option of bundling voice calling minutes with its concierge service.
MVNOs in the business and M2M space would be more likely to be application-centric than voice centric, said Yankee Group senior analyst Marcus Torchia. Companies in the M2M space today, such as Aeris.net and Numerex, are not considered MVNOs as such, even though their business model involves buying network access from wireless carriers, repackaging it, adding services and integrating applications.
Torchia noted that while in the world of voice at least 90 percent of sales go through carriers directly, it’s virtually the opposite in the M2M world: the vast majority of sales are made through resellers. He described the market as being fragmented and in its early days-much like the younger days of cellular, when carriers used resellers to make inroads in the voice marketplace.
The business applications involved, Torchia noted, often are customized and would require significant work to scale up and integrate. Uses can range from real-time reading of utility meters to environmental monitors that could take advantage of carriers’ new, robust data networks, and MVNOs could “help carriers get more users on their networks, using more data, without [the carriers] actually doing the work,” Torchia said.
“There’s a new skill set that’s involved, and it’s something that most carriers don’t have, or don’t want to have,” he said.
