Two years ago there was a new acronym in the wireless industry and many analyst reports predicted that it signified the next big thing: mobile virtual network operator, or MVNO. Earlier this year two of the biggest MVNOs in the U.S. crashed and burned: Amp'd Mobile and Disney Mobile. Their demise followed closely on the heels of Mobile ESPN's closing in 2006.
Disney Mobile, which launched in June 2006 using the Sprint network, ultimately discovered that it could not lure as many subscribers as they originally hoped they could from the big carriers' family plans. Innovative mobile content and special services like Disney's family-finder application pushed the industry to support more location-based services, but weren't enough to convince subscribers to join Disney to get their hands on them. The service will remain live through Dec. 31 and Disney has offered to reimburse subscribers who purchased handsets, accessories and content through the company. The fate of Disney Mobile's 120 employees is presently under discussion.
Amp'd had subscriber acquisition problems of its own, but rumors circulated that the real poison pill for this MVNO was its subscribers' inability to pay their bills. Despite having more than $360 million in venture capital financing and 200,000 subscribers, Amp'd had more than $100 million in debt, owing some $33 million to Verizon Wireless for network operations and at least $16.4 million to Motorola for handsets. The embattled MVNO alerted subscribers that it was shutting down its service via text message in mid-July.
Now that Amp'd and Disney shuttered their doors, few are bullish on the MVNO model in the U.S. Well, that is, with the exception of SK Telecom, which keeps investing hundreds of millions of dollars into Helio.