Time to play “Guess the mobile virtual network operator.” Your clues: U.S.-based, postpaid but requires no contract and relies on Internet sales and telephone sales for distribution. The MVNO is hosted by a national carrier and has nearly doubled its customer base within the past year to land at a comfortable 100,000 subscribers.
Oh, and another thing-it was started about 10 years ago, or “back when it was still just called reselling,” according to company co-founder and president John Marick.
Give up?
That would be Consumer Cellular.
In a time when rumors abound about the disappointing performance of high-profile MVNOs, Consumer Cellular has seen its business take off. According to Marick, the company is on track to again double its customer base within a year.
Consumer Cellular targets mature adults between the ages of 40 and 70 years old, who are not likely to use their wireless phones heavily and are keenly interested in having wireless service in case of emergencies. The company has relationships with groups such as local affiliates of the American Automobile Association, the American Association of Retired Persons and other travel groups.
One thing that makes MVNO success easier, Marick said, is targeting a specific group-such as older Americans-that carriers either aren’t doing a good job of serving or don’t want to make the effort to go after. The millions of dollars that national carriers spend on advertising can be hard to overcome, he said-but those ads also typically feature young men and women downloading music or talking excessively, or families with children. Consumer Cellular instead focuses on simple plans and handsets that don’t have excessive bells-and-whistles and are easy to use.
“To the degree that you’re not competing head-to-head for the same customers the carriers want, it’s that much easier,” Marick said.
While advanced services aren’t what Consumer Cellular is after, Marick said that the company has been lobbying Cingular Wireless L.L.C., its nationwide carrier partner, to allow customers access to features such as multimedia messaging. It can be frustrating, he noted, when customers would like to send a picture they’ve just taken with a new camera phone and have to be told that they can’t.
Marick describes the business as having thin margins and that the recent hype belies a business that isn’t easy.
“People have been seeing it as a gold rush … We really don’t think that’s the case, after being in it for 10 years,” Marick said. “I think that it’s important that people truly have a unique niche and provide reasons why the people are choosing them” for service.
Consumer Cellular has managed to achieve its customer growth without a single retail store. Most of the growth has come since Cingular’s acquisition of AT&T Wireless Services Inc., Marick said, as well as the tie-ups with the travel groups. The company now has a much larger footprint in which to offer its services, as well as a market that has traditionally been under-penetrated.
When asked how many customers are needed for an MVNO to be a viable business, Marick said “it seems to be a moving target.”
When Consumer Cellular started, he recalled, the word was that viability took about 10,000 customers-and when the company hit that mark, he began hearing that 25,000 subscribers was the magic number. Later, it jumped to 100,000 customers, which is about where Consumer Cellular stands after a decade in business, and which Marick said is definitely a viable number for his company.
Still, he noted, different business strategies will probably have different magic numbers-and if one of the new, much-hyped MVNOs peaks at 100,000 subscribers, it would probably be considered a failure.
“You don’t have to be (serving) millions of customers to be successful,” said Marick. But, he added, he thinks 100,000 subscribers is a minimum number. “You need to be able to get there relatively quickly to get the carriers interested in you and be able to provide the services that are going to be needed.”
Marick said he hopes that the quieting MVNO hype doesn’t create a backlash and that carriers continue to see enough value in MVNOs to continue their wholesale operations.
“Our concern would be that the pendulum swings too far back, and people go from being overly exuberant to saying, `Oh, this is ridiculous, let’s close it all down,”‘ Marick said.
