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October 17, 2007
Leo Chan Asks about MVNOs
Question Details:
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Mixed signals as Disney shut down MVNO, Helio cut handset price, Virgin Mobile IPO, and did anyone notice that ILEC based MVNOs remain standing?
Did anyone notice that the ILEC based MVNOs are still alive and kicking (see recent stories from Embarq)? Which of the following do you think contribute to their success (if you can call it that)? Will they last? What could be their exit if there needs to be one or there will be one?
1) Cost efficiency thanks to the shared back office used by the ILEC.
2) Market intelligence. After all they are the phone companies!
3) Keeping it low profile. What kills an MVNO? Success! Because of the subsidies.
4) They're losing socks and pants but somehow they manage to keep it afloat by cutting in the profitability of other services.
A very interesting question, and with our former telco background in common, I know you will appreciate that I did a spit take on the second possibility.
I think the issue is that we have not understood the complexities of brand vs. trust. I believe you can make a case for the iPhone being a new type of MVNO. The web in your hand at the end will be Apple's look and feel regardless of your using att or Orange.
The other side of the equation is the brand folks had no margin management in their deals. Its rough to work that way. Embarq can build a bundle and find efficiencies or subsidies as would call it.
Last but not least the consumer is not there yet. Like the the adoption of new energy providers. People still know who it is that delivers the service. IMHO if MVNOs were to learn from some of the Thomson set top boxes for triple play and became femto MVNOs that would be very powerful.
Kind Regards,
Carl
PS big discussions about Femtocells at VON this year
Posted by carl at October 17, 2007 08:10 AM
Comments
Have a look at http://mobiquity.ws
There will soon be 1.8 billion dotMOBI sites...
This service provides FREE NO CHARGE dotMobi sites to anyone.
It will soon ADD, Nimbuzz, Jaitku, Mobile Streaming Video and Mobile CallBack services with AD-Hoc conferencing.
Regards,
Ed Pimentel
Posted by: Ed Pimentel at October 17, 2007 10:56 AM
How many of the ILECS that are doing this offer a bundled service? They've got a captive customer base, so this is a logical move that could explain their staying power and/or willingness to subsidize.
Which ILECs are we really talking about anyway, Qwest?
Integrated billing could be another differentiator.
PS Carl, thanks for getting me the URL, you've got another reader!
- Steve
Posted by: Steve Smith at October 17, 2007 12:56 PM
Recent analsys of the German market suggests that 60% of the combined turnover-and-profit of MVNOs is spent on paying MNOs for network access. As a result, the MVNO has to offer something genuinely different (i.e. not just cheaper voice and SMS) in order to survive. Femtocells may have a role in reducing network access charges, but only if the MVNO has its own license for low-power cellular spectrum. Otherwise, it can use a combination of Wi-Fi APs and dual-mode phones (though I must express an interest here, as Cicero is a vendor in the dual-mode space).
Posted by: Ross Brennan at October 18, 2007 07:22 AM