Blackman said:
Dooley do you work in telecom? Used to be my area of expertise as well.
Agree with what everyone is saying, it's regional as far as who is the best, but in the NYC area Verizon has a stranglehold on the market. As far as phones I am not totally impressed with the Razor, it's fragile, nice phone but even with the insurance who wants to trade it in multiple times.
Nope not in the Telecom industry. Agree with the regional statment. Just read a alot, especially BusinessWeek- some of the best information is in there. Took me awhile to find this article b/c of the damn acronym MVNO.
Taking On the Wireless Goliaths
A new generation of service providers -- so-called mobile virtual network operators -- is targeting the big guys with bold consumer offerings
Three years ago, Sprint PCS (FON ) execs allowed an upstart brand, Virgin Mobile, to offer a prepaid mobile telephone service for teenagers using Sprint's wireless towers. It was supposed to be a market test, but it ended up turning the American wireless industry on its head.
Today, Virgin has 3 million subscribers, and Sprint, which owns half of the Virgin wireless service, has benefited handsomely from its growth. After that surprising success, Sprint opened its network to dozens of other renters, many of whom are set to enter the U.S. market within the next year. Verizon Wireless (VZ ) will likely follow suit and open up its network in hopes of similar successes.
As the number of wireless network renters, or mobile virtual network operators, continues to rise, their growth could damage the very network operators they're renting from. Unlike Virgin, many of them are offering regular payment plans to consumers and have not signed cozy equity agreements like the between Virgin and Sprint.
OLD GUARD RIVALS. "This is very similar to what happened in long distance, when, after deregulation, hundreds of companies began selling long distance," says Craig Mathias, founder of the wireless consulting firm Farpoint Group.
As they enter the market, these upstarts could change the way consumers buy wireless services -- and they could become nimble competitors to the old guard. Within the next five years, these so called MVNOs are expected to capture 20% of the wireless market, and 80% of their customers will be people who have had mobile service before, says Michael Grossi, a vice-president at the wireless consulting firm Adventis.
MVNOs, whether they are media companies, cable providers, or brand new outfits (see BW Online, 4/25/05, "P. Diddy Sees Bling in Ring"), have the reach and the marketing savvy that could surpass those of existing wireless players.
ON THE CHEAP. "They are as sophisticated, or even more sophisticated, than carriers in consumer marketing," says Matt Johnson, CEO of Visage Mobile, which sells billing software and computing technologies to MVNOs.
For example, ESPN, the cable television sports network, plans to launch ESPN Mobile in early 2006. Every week, ESPN reaches 97 million American sports fans via its TV and radio programs, the Web, and ESPN magazine. "We have the support of our parent company, [Walt Disney (DIS )]," says Manish Jha, senior vice-president of ESPN Mobile. "We can get the word out."
And ESPN can do it on the cheap. While it may take more than $40 million to build up a traditional wireless service, Visage offers a standard platform that is a much cheaper alternative. Typically, an MVNO might, for example, pay Visage a $1 million-to-$2 million lump sum, plus a few dollars per subscriber each month, to get going.
TARGETING TEENS. Many upstarts, especially those coming in from media industries, can take advantage of their own content to lure subscribers. ESPN Mobile, for instance, will offer sports news and video clips.
An outfit called Amp'd Mobile, set to be unveiled this fall, even aims to become a sort of a wireless music and video sharing service for teens. It will allow customers to wirelessly send to their friends video clips and songs from thousands of garage bands.
Many newcomers will also compete with existing service providers on price. Primus Wireless, a venture launched in March by telecom provider Primus (PRTL ) in McLean, Va., allows customers to make 2.9-cent-per-minute calls to Moscow at night and on weekends. Other major cellular providers might charge as much as $1 a minute for similar calls.
LOSS OF CONTROL? Such a lower price could appeal to an estimated 60 million Americans who conduct business internationally or routinely call relatives in other countries, says Jay Rosenblatt, president of Primus Wireless.
Today, only 5% of U.S. wireless users make international calls via their cell phones, compared to 25% to 30% of Europeans, he says. Granted, European countries are much smaller than the U.S., and their residents travel between countries more frequently. But it's a noticeable difference.
As MVNOs spread their wings, carriers will suffer, since, nowadays, they typically don't get any stake in the MVNOs they host, as Sprint did with Virgin. Not only will they not share in the MVNOs' success nearly as much, but they will also have much less control over these ventures should they go awry and start eating away at the carriers' brands.
AHEAD IN THE RACE. "I get enough control [over MVNOs] by virtue of how I structure the agreements with them," says David Bottoms, Sprint's vice-president for strategic partners. For instance, he explains, an MVNO that targets Hispanics can't start catering to Koreans. Yet, most customer segments aren't as clear-cut as that.
So what are old-fashioned carriers to do? To a certain extent, their strength lies in the contracts they sign with the MVNOs -- at least in the case of Sprint. For others, the segmentation of the MVNO market allows them to stay ahead in the race to niches.
And if you're Cingular (SBC , BLS ), you do it yourself. Later this month, the wireless service provider will start offering its own GoPhone prepaid service for small businesses, teens, and kids.
ROLE SWAP. "Carriers need to be very smart about how they split their brand equities," says Marc Lefar, Cingular's chief marketing officer. "The idea of simply opening up a network is not doing any good to anybody."
Many wireless industry insiders slough off the threat, figuring that all the new guys will do is expand the market to everyone's benefit. But before long, they could be wondering if their upstart renters are becoming the landlords.