For years, the nation’s two largest wireless carriers, Cingular Wireless L.L.C. and Verizon Wireless, have focused on their network’s reach and reliability in marketing strategies and their business models. But now that both carriers are going to use Qualcomm Inc.’s MediaFLO USA Inc. network for a streaming television service, are they becoming mobile virtual network operators?
Not quite, but the MediaFLO announcement underscores changes in the industry, both in the United States and worldwide.
Peter Adderton, the CEO and founder of MVNO Amp’d Mobile Inc., recently elaborated on the idea in an interview with RCR Wireless News. While Adderton believes both major carriers’ approach and foray into mobile TV only further validates Amp’d Mobile’s business model, he still finds it ironic that companies-which have built their businesses around the network-essentially abandoned that approach in their plans for mobile television.
Because of that, Adderton said Verizon Wireless and Cingular’s decision to go with MediaFLO come out of left field for him, but he sees it as the next logical step in the industry and anticipates more network sharing in the years to come.
“In the long run this aggregation makes a lot of sense; that you have some providers concentrating on the network” and others focusing on marketing and content, said Roger Entner, vice president of wireless telecom at Ovum, an analyst and consulting company. “To that extent, yes, they are becoming MVNOs on MediaFLO, so you can’t dispute Peter’s analysis.”
Verizon Wireless, which happens to provide the network that Amp’d Mobile uses, was less than flattering in its reaction.
“I don’t have a response to someone who’s not in our business . I don’t understand the relevance to anything,” Verizon Wireless spokesman Jeffrey Nelson said. “We’re going to be adding yet another offering to our multimedia services. It comes to us a different way than we typically provide services to our customers,” but nothing has changed in the overall scheme of things, he said.
Close, but no cigar
While Entner agreed with some of what Adderton said, he stopped short of joining his long-range predictions.
“Considering how different the networks are, how big this country is, and how comparative it is, I would say it will take a very long time” before we see widespread sharing of networks, he said. “Geographically, the current state of technology is just too different.” He did leave open the possibility for more shared networks-such as the case in parts of Europe and Australia-if technology in the fourth- or fifth-generation of cellular networks were to converge.
International trend
Rival carriers sharing a network is not a new idea. The idea was tossed about after European wireless carriers paid billions of dollars for 3G licenses only to have to go further into debt to build out those networks. In 2001, British Telecommunications plc and Deutsche Telekom AG announced they would share construction costs for wireless networks in the United Kingdom and Germany. About the same time, the world’s largest infrastructure vendors started making noise that they should deal with the nuts and bolt of running the networks and carriers should concentrate on marketing, sales and service. While neither trend has been wholly adopted by wireless carriers, there are instances where these ideas are becoming reality. Indeed, at this month’s 3GSM World Congress, several international operators touted the benefits of network sharing.
But in the U.S?
Because Qualcomm controls the MediaFLO channel offerings, Verizon Wireless and Cingular won’t have a say in the programming their customers will turn to for mobile broadcast television, Adderton said, adding that they need to focus more on the content their users want and less on the technology that enables it.
“It’s going to be the same network. The vast majority of the programming is going to be identical,” Entner added.
Adderton said it makes no sense to spend years and billions of dollars building out or upgrading a network to only find when it’s completed that new technology exists that is cheaper to build and provides significantly better service. How many redundant networks can the United States’ wireless market sustain? he asks. The answer to that is still years off.
