MVNOs Not Making Money? Surprised?

15 thoughts on “MVNOs Not Making Money? Surprised?”

  1. “Pyramid concludes that not all MVNOs will achieve profitability” WOW, you mean to tell me that not all new business ventures are expected to make money? Is this what they mean by the new economy?

  2. If an MVNO is a telco without a network, then it’s not surprising they don’t make money! The ones that do make money are innovative and concentrate on service differentiation, specialising in market segments (Virgin being a good example).
    There’s nothing wrong with the MVNO model, it’s just been generally poorly executed up to now.

  3. maybe this explains why there is only one MVNO in canada – virgin mobile. of course, it may have to do with the fact the penetration rate is only 52% so the existing carriers may want more time to pick the low hanging fruit before bringing on MVNOs.

  4. The prospects are better in developing nations with a large upper class customer base. They are the ones willing to pay a higher price for better customer services and high end features.

  5. I’m sure Virgin Mobile US counts among the most profitable, and largest MVNOs.

    There are certainly too many hare-brained MVNO concepts out there, but like any new business segment, there will be some spectacular failures (ESPN…), and a few gems.

    MVNOs with healthy combinations of outside the industry marketing know-how, wireless operating expertise and a good nose for consumer tastes will find and build good niches for themselves.

    ESPN would be my number one choice for an early exit from this market.

  6. Tom, I wouldn’t count ESPN out so fast. They do have good demographics. Look for Disney to have a Princess MVNO offering (I would invest in that) that could do well, Trump could come out with one that could be popular (with expected downloaded ringtone of “Your Fired”) and the popular Dick Cheney MVNO (with its ringtone of a shotgun blast, quick, duck.)

    Seriously, could see some strong players from Wall Mart, 7-11 (think phone cards) or companies like that, what is their additional cost of entry? They have built in distribution and customers. Just another product on the shelf for them. Some will do well, some will crash and burn, some will be real fun to watch doing either one.

  7. Wal-Mart is more interested in entering the consumer banking industy, and the sinkhole of telecom.

    re:MVNO’s

    You guys are all suckers.

    Because MVNOs were never allowed/designed to be of any benefit to anybody but the host carrier.

    MVNO’s are a legal way for carriers to capitalize OPEX, which happens when the host finally rolls these MVNO players up.

    The whole plan from the beginning was this:
    1) We (mostly Sprint) spent way too much money on our network, ie CAPEX.
    2) The revenue, specifically YEILD ($$$/mou), fell much faster than we thought.
    3) Thus, how do we acquire subscribers, ie revenue, with minimal additional (ie. marketing) costs.
    4) BINGO, collect $200, and proceed to GO.
    That’s right we find some sucker (ie. partner) to cover the marketing costs.

    If that’s over anybody’s head, just remember that MVNOs are all about host-carrier finance. OPM (other people’s money) baby.

    The carriers will never do a deal with anybody smart, and vis-a-versa. Just look at the cable deal Sprint just signed. By 2010, the MSOs will build their own network, for pennies on the dollar for what the current players invested.

    Praise the lord for Moore’s Law.

  8. Patrick – Agree that MVNOs with great distribution opportunities can really make something happen. ESPN, however, does not qualify as someone with strong retail distribution. Where will anyone buy an ESPN phone? Magazine inserts, online channels and direct mail are tough ways to get customers. Disney stores?

    It’s the same problem an MVNO like Helio faces. With no retail distribution to speak of, how will they sell their phones? Best Buy and Circuit City together don’t even amount to 5% of the total retail channel out there today. Online partnerships (MySpace) are great, but not for selling fancy phones. Agent stores can help, but only if the MVNO is willing to pay through the nose.

  9. I actually work for a VNO; not a mobile VNO but a proper global data and voice VNO. Actually it’s the first VNO (established 1988) and has always been profitable. When it comes down to it, Patrick has a point about the idiocy surrounding a VNO taking over the marketing of an asset based carrier. How could a company possibly think that they will be able to market a simple commodity such as wireless better than a multi-billion dollar carrier? How could they possibly count on making a higher profit than the asset based carrier when their underlying costs are ultimately controlled by their competitors? When it comes down to it, any VNO needs a VALUE ADD in order to make margin on a specific product. What could be the value add from an MVNO, all marketing gizmos aside? Nada, because the best handsets go to the big carriers first, and an MVNO can’t really add features to a network that they don’t control.

    p.s. I’m quite secure in my own position, considering that there’s a lot more value add to be found in the rest of the global telecommunications industry. Naysayers beware!

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  11. hahaha. dont u feel stupid now? Its been almost twelve months and amp’d subscriber number tripled over the last quarter of 2006. Nice prediction clown.

  12. And now Amp’d is completely out of buisness. Looks like he wasn’t far off. Lesson, don’t call people stupid, it only makes you look dumb when they’re proven right.

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