MVNO

Nokia to launch its own MVNO in Japan

Phil Goldstein — Mon, 24 Nov 2008 11:23:09 -0500

Nokia will launch its own MVNO in Japan in the first half of 2009. According to reports in Kyodo News and the newspaper Yomiuri Shimbun, which cited unnamed sources, the world's largest handset maker will begin offering wireless service in Japan, and will focus on the high-end market with its luxury Vertu phones. The company will use NTT DoCoMo's network.

The Japanese wireless market, which is dominated by DoCoMo, KDDI and Softbank, has been especially hard for Helsinki-based Nokia to crack because the operators retain tight control over what handsets make it into the market.

For more:
- see this IHT article

Related Articles:
Nokia dealt blow in Japan
Japan puts pressure on Nokia over battery issue

The top five most innovative MVNOs in Europe

Phil Goldstein — Mon, 27 Oct 2008 10:26:32 -0400

With declining voice ARPU, increasing market penetration and a demand for a wider array of services, MVNOs will look to provide a higher quality experience to increasingly niche markets. FierceWireless: Europe looks at the top five most innovative MVNOs in Europe. Article

Femtocells: making the economics of convergence work

Sangit Rawlley — Wed, 22 Oct 2008 11:29:55 -0400

Indoor telephony is under renewed attack. Emerging coverage enhancement solutions such as femtocells threaten to further erode the already declining market for fixed-line phones. But with adversity has come opportunity. Femtocells mitigate many of the historical challenges that lead to the failure of MVNO's set up to offer converged services and provide another opportunity for wireless and fixed line operators to work together.

The significance of having high quality voice telephony inside the house cannot be denied. According to the Bureau of Labor Statistics 76 percent of an average person's "awake hours" resides indoors. Of that time, 61 percent is spent in the home vs. a separate building.

Indoor telephony has traditionally been the stronghold of wireline and cable (fixed line) carriers. However, in the last few years cord-cutting has emerged as the primary threat for fixed line carriers. Declining mobile price is the key driver for this trend. According to CTIA, around 15.8 percent of U.S. households were wireless-only in 2007.

But there are limitations to using the cell phone inside the house. Bad indoor wireless coverage is one of the key barriers to cord-cutting. According to a Harris Interactive survey, 62 percent of cell phone owners have done something special to improve signal reception in an attempt to make or receive a cell phone call at home. 30 percent said they used their fixed-line phone.

Today the question that is top of mind for all fixed line operators is how best to deal with femtocells. The situation is grimmer for operators such as British Telecom, Embarq, and Qwest that don't own wireless assets. Their past attempts to reduce cord cutting by offering wireline-wireless bundles and converged services through wireless wholesale (MVNO) deals have failed.

But there is a glimmer of hope. Femtocells require a broadband connection to operate. Fixed line carriers can leverage this dependence of femtocells on DSL and cable in two ways--obstructive or constructive. The obstructive approach revolves around non-cooperation with wireless carriers and FUD (fear, uncertainty and doubt) marketing. Such tactics are not sustainable in the long term. The constructive approach is difficult, but if implemented correctly can reap long term benefits. This approach involves setting up mutually beneficial partnerships with wireless carriers to revive the convergence play.

Naysayer's will immediately shoot down this idea on the basis that it has been attempted in the past and did not work. But, before we jump to any conclusions lets investigate the two key reasons for failure and understand how femtocells will mitigate historical challenges.

Unfavorable wholesale rates (supply side)
Limited customer adoption (buy side)

Unfavorable wholesale rates

This has been one of the key reasons of failure for MVNO's in general. The negotiating power has traditionally been skewed in favor of wireless carriers. This resulted in high wholesale rates. The thin spread between revenue and cost-per-wireless-minute was not enough to cover operational costs. But, with advent of femtocells this situation will change.

First, wireless carriers depend on cable/DSL connections to deploy femtocells and this gives some negotiation power to fixed line operators. Second, deployment of femtocells will result in substantial backhaul savings for wireless operators. Yankee estimates that 32 percent of wireless usage occurs within the home -i.e. 320 minutes per month, if we assume the average monthly wireless minutes per subscriber to be 1000. This results in approximate backhaul savings of $2.14 per subscriber per month. Moreover, in-home usage will increase as voice quality improves resulting in greater backhaul savings. Also, wireless operators will realize substantial savings with data offloading. Thus, there is an opportunity for fixed-line carriers to negotiate lower wholesale rates for in-home minutes and in-turn guarantee quality of service. An innovative financial arrangement can eliminate one of the key reasons for failure of MVNO's.

Limited Customer Adoption

Customer adoption of advanced converged services has been low. British Telecom (BT) mustered only 45,000 subscribers for its Fusion service by end of 2007. In the past, converged services have revolved around Wi-Fi - wireless convergence. This meant consumers required dual mode devices to avail these services. Dual-mode devices are expensive and limited in choice and form factor thus hindering adoption. With femtocells this barrier is eliminated as consumers can use their existing devices.

Other factors that limited adoption of converged services were unfavourable price plans; quality of services offered and market readiness. With femtocells customers will not only get improved indoor coverage, but they can also be offered discounted pricing within the home. Better quality advance wireless services can also be offered at a lower price or as part of the home package. Plus, recent surveys from In-Stat and KPMG have indicated that consumer willingness to adopt converged services has increased.

There is a strong case for fixed line carriers to set up femtocell-based ventures with wireless carriers. But to be successful, it is important to learn from past mistakes. Recent outcomes have shown that equity participation forms the basis for most successful relationships. Hence, forming JV's with wireless carriers may be a good option to structure future agreements. Wireless carriers such as T-Mobile and Sprint are ideal partners as they don't own any fixed line assets. The agreement between Sprint-Clearwire and cable companies is a good example. Another option is to adopt a managed service model where the fixed line carrier is responsible for installing and maintaining femtocells. Vodafone and BT recently signed a five-year wireless backhaul and managed service agreement. Such agreements could expand to include femtocells. Preferred partnerships can also be formed where wireless carriers guarantee QOS only if consumers subscribe to a particular broadband provider.

Some fixed line carriers have taken steps to evaluate the feasibility of femtocells. BT has joined the Femto Forum and Comcast has set aside 5 MHz of spectrum for WiMAX femtocells as part of its deal with Sprint/Clearwire. Other fixed line carriers should follow suit. Now is the right time for fixed line carriers to embrace femtocells and convert this threat into an opportunity. As they say, if you can't beat them join them.

Sangit Rawlley is a senior manager and practice lead with inCode Telecom (www.incodewireless.com), a global consulting firm focused on providing wireless strategy, business planning, strategic sourcing, engineering and integration services to companies across the communications value chain.

22. Dan Schulman, CEO of Virgin Mobile USA

Phil Goldstein — Fri, 10 Oct 2008 15:26:50 -0400

What makes him powerful: Dan Schulman has the distinction of heading up Virgin Mobile USA, one of the first major MVNOs to launch in the U.S. back in 2002 and one of the few MVNOs to survive in today's tumultuous wireless marketplace. While the U.S. market has not been a particularly friendly place for virtual operators, Schulman has managed to keep Virgin Mobile USA alive and growing.

Virgin, which started as a joint venture with Sprint, initially targeted the youth market--a demographic group that Schulman has said was underserved by traditional wireless carriers. That early focus was critical to Virgin's initial success and the reason the MVNO grew so quickly, attaining 3 million-plus customers by early 2005.

Under Schulman's direction, the company also has been an innovative leader in the advertising area. The company launched the Sugar Mama mobile advertising service in 2006. The program gives customers free airtime in return for viewing mobile ads. A year after the program's launch, Virgin said more than 330,000 of its 5 million subscribers had signed onto the plan.

But Virgin has come under increasing pressure since Schulman and his executive team took the company public in the fall of 2007, generating about $412 million for the firm. In fact, during the most recent quarter, Virgin earned just $3.5 million in net income, down from $7.1 million in the same period in 2007. Revenue was down to $317.4 million from 327.6 million and the company lost about 111,000 subscribers bringing its total subscriber base to just under 5 million.

Yet Schulman has ushered in some bright spots for the company. Virgin completed its acquisition of rival MVNO Helio at the end of August. Although Virgin continues to consider the youth demographic its core customer base, the Helio acquisition will increase Virgin's reach to other demographic groups, including Korean-Americans. As part of the Helio deal, Korean wireless player SK Telekom invested $25 million in cash in Virgin, which it badly needed.

Disney still enamored with wireless

Sue Marek — Thu, 21 Aug 2008 10:26:57 -0400

Just because its Disney Mobile MVNO failed, that doesn't mean Disney is giving up on selling mobile content to tweens. The company last fall launched a mobile Web site that acts as a clearinghouse for all Disney mobile content. It also started experimenting with mobile marketing campaigns.

Now the company is taking its mobile offerings a step further. Next month Disney will debut a registration system that will allow users to access their Disney.com profiles automatically via their cell phones giving them access to their online content. Soon after, the company plans to launch a digital storefront that will give consumers the ability to purchase Disney games, ringtones and wallpapers from their phone and add those purchases to their cell phone bill.

For more:
- see this Forbes article

Related articles:
Disney Mobile shutters its doors
SPOTLIGHT: On the Hot Seat with Disney's Larry Shapiro

Virgin Mobile loses 111,273 customers in Q2

Sue Marek — Thu, 14 Aug 2008 11:45:19 -0400

The struggling U.S. economy continues to plague Virgin Mobile USA. The prepaid MVNO lost 111,273 customers in the second quarter for a total customer base of 4.99 million, that's down from 5.1 million at the end of first quarter. The company's net income was also down. In the second quarter it earned $3.5 million, down from $7.1 million in the same period in the previous year. Revenue was down to $317.4 million from 327.6 million. Here are the other key metrics:

CPGA: Cost per gross add was $113.38 up from $100.03 in second quarter 2007. The higher CPGA was related to more marketing and distribution costs. Specifically, Virgin said it had higher retail commissions due to the popularity of the Wild Card handset and the Slash phone.

ARPU: Average revenue per user was $19.32, down from $20.97 in second quarter 2007. The company expects ARPU to improve in the second half of the year as more high-value hybrid customers join the ranks and adoption of the company's "Totally Unlimited" plan for $79.99 increases. Anecdotally, Virgin Mobile CEO Dan Schulman said the Totally Unlimited plan was drawing more interest than expected from customers.

Churn: Churn for the quarter was 5.6 percent, below company estimates and better than the 5.7 percent churn in second quarter 2007.

For more:
- see this press release

Related articles:
Virgin Mobile USA confirms Helio acquisition
Virgin Mobile USA: Poor earnings economy's fault

Mark Lowenstein: The Emergence of MVNO 2.0

Mark Lowenstein — Thu, 14 Aug 2008 09:39:30 -0400

Over the past couple of years, we have witnessed the failure of many high profile MVNOs--Disney Mobile, Mobile ESPN, AMP'd, Helio--and the ongoing struggles of many others. Analysts and the press have declared the MVNO market all but dead. I think this proclamation is premature. In fact, we are witnessing the rebirth of the MVNO concept, but in a different form. My prediction: we will see a number of MVNOs be quite successful over the next few of years. Call it MVNO Version 2.0. Who might they be? What will they look like? And how will they impact the market?

Cutting right to the chase, we are seeing the birth of the first major 2.0 MVNO right before our eyes: Apple. We have conventionally defined the MVNO as an entity that purchases capacity on a carrier's network on a wholesale basis, uses a third party (MVNE) for back-end for OSS, and offers its own branded service, device, application suite, and markets directly to consumers. It is successful as an MVNO because the overall experience--device, applications, user interface--is compelling. The model is different from traditional MVNOs in that Apple is making most of its money from devices rather than services, and has a cooperative model with its host operators from the standpoint of distribution.

Another, far less sexy, MVNO that has traction is Jitterbug--the service from Great Call focused on the senior market. They have created a sufficiently different overall experience, from pricing to device to UI, that demonstrates their understanding of a market segment that has been under-addressed by the major operators.

To understand how MVNOs might be successful in this new clothing, we should understand why so many Version 1.0 MVNOs struggled. First, as retail wireless prices declined, the "spread" between wholesale and retail disappeared, leaving little margin on voice. Second, the relationship between the host operator and the MVNO has often been strained. Virgin USA, Boost Mobile and TracFone have been MVNO success stories because the operators were happy to "outsource" their prepaid business. In many other cases, MVNOs were treated as second-class citizens with respect to the latest devices, data network availability, or advanced features such as GPS. Clearly, many made significant errors themselves. They were naive about the capital involved and mis-spent what they had in some cases; misread their segments; and faltered on execution. Finally, I would say that their value proposition was not differentiated enough. Again, look at Apple. In nearly all aspects, the customer experience is significantly different, which we can see in the way people are using their iPhones.

But the stars are aligning to create MVNO Version 2.0, and it will be about more than Apple. One key element that is enabling the "rebirth" of the MVNO is a less monolithic mindset among the major operators. In AT&T's case with Apple, it is willing to be that dreaded "dumb pipe" in return for ARPU that is 50 percent above the industry average, thank you very much. In Verizon's case, the Open Development Initiative allows for the possibility of a third party offering a relatively complete service to subscribers, using Verizon's network and some components of its back-end infrastructure. ODI is in many respects the reincarnation of Verizon Wireless' wholesale business--2008 style.

Another key factor is a burgeoning application development environment. Yes, it is still frustratingly fragmented, but there is tremendous energy--and, now, real capital--behind developing applications for the Apple, Blackberry, Windows and Symbian operating systems.

We are also entering an era where there is greater abundance of network capacity. With consolidation, and the significant amount of additional spectrum that is coming online, operators might be more anxious to have additional major tenants. The definition of "service provider" will evolve as 4G networks are build, and we see a new class of data-centric devices.

We will have to broaden our definition of what constitutes an MVNO. Some will be at the vanguard of business model experimentation and will make money in different ways. For example, I believe there will be some MVNOs that rely on advertiser support of various flavors. For example, an MVNO in the U.K called Blyk, which is focused on the 16-year-old to 24-year-old segment is offering a bucket of free texts and voice minutes in return for users' willingness to view ads.

There also is significant opportunity for the provider who can effectively combine search, LBS and advertising. Targeted advertising enables the type of market segmentation that has been an integral component of the original MVNO concept, and the technologies are there to measure the effectiveness of this approach.

Who might some of these new MVNOs be? Here are some of my predictions:

Google. The much-anticipated Google device will feature a host of Google applications optimized for mobile, third-party apps based on the Android development platform, and over time, a business model more dependent on advertising than a traditional operator model.
International. Someone is going to come along and take a serious whack at exorbitant international roaming rates. We will see numerous approaches, from cellular VoIP to local HLRs to dual SIMs and SIM farms.
Auto-centric services. OnStar is one of the unsung success stories of the MVNO market, with more than 5 million subscribers. Ford has launched a competitive service called Sync that is being well received. Between auto companies' needs for additional sources of revenue, the steady spread of legislation concerning the talking/texting while driving issue, and the availability of applications that would be attractive in a vehicle, we should see a lot of innovation coming out of this sector.
M2M. This is an area that has been growing quietly but steadily. It doesn't have the buzz of the Apples and the Disneys, but operators see this as an untapped area and have been more willing to host third parties creating M2M apps.
Enterprise. There have been few success stories in the enterprise beyond email and mobile broadband. I do believe that over the next couple of years there will be some good application-specific plays, or perhaps an MVNO that develops a common platform offering a suite of enterprise applications (just don't call it middleware). Top candidates are in the sales force automation area and medical sectors. I also believe major operators will be more open to working with third party entities who really know these markets well.
Device-centric MVNOs. We are at the beginning of a new phase of device form factor and user experience evolution. Of course there will be numerous attempts to copy the Apple model. We will also see a host of devices optimized for particular applications, such as email, multimedia, games, and so on, employing a diversity of business models, from traditional operator to MVNO-esque like the iPhone.

The success of MVNO 2.0 is not assured. A challenging economy and a bad quarter or two could cause the operators to retreat like turtles back into their shell. One concern, in the U.S. at least, is where the MVNO "subscribers" will come from, as the major operators have been very effective at reducing churn and getting customers into "sticky" arrangements such as family plans.

So for those who thought they wrote the last chapter on MVNOs, we've already begun the sequel.

Mark Lowenstein is Managing Director of Mobile Ecosystem. Click here to subscribe to his Lens on Wireless newsletter, and to find out more about an exciting event planned for October, the New England Mobile Summit.

Furniture retailer IKEA becomes an MVNO

Sue Marek — Tue, 12 Aug 2008 10:54:15 -0400

British consumers will soon be able to get mobile phone service through an unusual source--home furnishings retailer IKEA. The Swedish furniture firm will offer prepaid mobile service for around $20 per month to members of its loyalty program. In addition, about 9,500 IKEA staffers will be issued phones with about $10 in prepaid minutes. The MVNO will use T-Mobile's wireless network for its service.

Strand Consulting says that the IKEA MVNO is being run by Danish MVNO pioneers Teddy Sogaard Pedersen of the MVNO CBB and Martin Petersen of the MVNO Telmore. Strand says CBB and Telmore were competitive MVNOs in the Danish market and in just a few years acquired about 20 percent of the mobile market with their Web-based discount concepts.

Strand warns competitors to be careful not to underestimate the IKEA MVNO, which the consulting firm believes has larger ambitions than just providing mobile service as part of its loyalty program. In fact, Strand expects IKEA's FamilyMobile MVNO to become competitive and offer advanced services including 3G, Web SMS and more.

For more:
- see this news report

Related articles:
ROK drops bid to acquire MVNO Xero Mobile
Report says WiMAX MVNO model Xerowork

Virgin buys Helio for $39 million

Sue Marek — Fri, 27 Jun 2008 09:58:10 -0400

The rumored VirginMobile/Helio deal is now a reality. Virgin Mobile USA will acquire Helio from SK Telecom and Earthlink for an equivalent of 13 million shares of Virgin Mobile stock with a value of $39 million. Virgin Group and SK Telecom each will invest $25 million in equity capital in the company. SK will have a 17 percent investment in Virgin Mobile and two seats on the Virgin Mobile board of directors. The deal is supposed to close in the third quarter.

Virgin says that the Helio deal will be good for the MVNO because it will allow the company to offer differentiated data applications and enter the postpaid market. Helio has approximately 170,000 subscribers with an ARPU of about $80 and a handset inventory of 85,000 devices valued at $17 million. By acquiring Helio, Virgin expects to increase its volume of minutes and therefore drive down the company's cost per minute network usage deal that it has with Sprint. On a conference call this morning with investors, Dan Schulman, CEO of Virgin Mobile USA, said that Virgin's agreement with Sprint is no longer tied to Sprint's costs but instead is based on total revenues that Virgin delivers via airtime minutes and megabytes of data. Schulman says he expects a minimum 8 percent discount on network costs in 2009 with further reductions in subsequent years. "This reduces our third-party risks...and allows us more margin," Schulman said.

Virgin also will acquire Helio's postpaid platform, which Schulman estimated would cost the firm between $20 million and $25 million to build if Virgin wanted to try to replicate it from scratch. Schulman says that this platform is strategically beneficial to the firm because 20 percent of the firm's disconnects come from customers going to postpaid products so he believes that offering postpaid service will be a retention tool for Virgin.

Nevertheless, Schulman asserts that Virgin doesn't want to attack postpaid incumbents with a postpaid offering. Instead he believes that the integration with Helio will allow Virgin to reduce its churn and appeal to higher spending customers "We will focus on the quality of our base, rather than growing aggressively," he said. "We have modest postpaid expectations."

Schulman added that Helio will cut its sales and distribution costs before the acquisition closes. That means the company will shut down its five retail stores and kiosks. Yesterday FierceWireless reported that Helio's store in Denver had closed. Here's a photo of the sign on Helio's store.

Virgin will use the investments from SK Telecom and Virgin Group to pay down its debt. Both SK and Virgin also will provide an additional $35 million and $25 million respectively to increase Virgin Mobile's revolving debt facility to support ongoing growth.

For more:
- See this press release

Related stories:
Virgin Mobile USA poised to acquire Helio
Helio troubles continue; Kajeet changes focus

Photos: Helio Stores Close Up Shop

Mike Dolan — Thu, 26 Jun 2008 15:30:43 -0400

A Helio store in the pricey Cherry Creek shopping district of Denver, CO has a closed sign up today. This appears to be validation that the MVNO is closing its stores as reported by FierceWireless Monday.

As we reported earlier this week, the MVNO space continues to be plagued by problems. Gizmodo reported that embattled MVNO Helio is on life support after merger negotiations between parent firm SK Telecom and Virgin Mobile USA stalled. According to reports, Virgin's interest hinges on either a bankruptcy declaration or massive liquidation. In the meantime, Helio is planning to begin closing its retail locations and kiosks. Even if an official merger fails, reports suggest that remaining Helio subscribers will be migrated to the Virgin Mobile network.

Click here to see our photos of the Helio store closed and the signs on the doors...

Related story: Helio troubles continue

Helio troubles continue; Kajeet changes focus

Sue Marek — Mon, 23 Jun 2008 12:20:15 -0400

The MVNO space continues to be plagued by problems. Gizmodo is reporting that embattled MVNO Helio is on life support after merger negotiations between parent firm SK Telecom and Virgin Mobile USA stalled. According to reports, Virgin's interest hinges on either a bankruptcy declaration or massive liquidation. In the meantime, Helio is planning to begin closing its retail locations and kiosks. Even if an official merger fails, reports suggest that remaining Helio subscribers will be migrated to the Virgin Mobile network.

In related news, tween-focused pay-as-you-go MVNO kajeet has laid off some of its sales force. According to CEO Dan Neal, the MVNO laid off an unspecified number of sales reps as it shifts its focus to acquiring customers online. In an interview with FierceWireless, Neal said that the company made some "strategic adjustments" because it has learned that its best customers are Web-savvy. "You will see us have more emphasis online. That's where we can engage the best customers for us."

For more on the Helio rumors:
- read this Gizmodo article

Related stories:
2008 Predictions: Helio goes bust.
It's official: Virgin Mobile USA is in talks with Helio
Helio CEO Sky Dayton steps down

It's official: Virgin Mobile USA is in talks with Helio

Brian Dolan — Wed, 14 May 2008 11:21:25 -0400

After a week of speculation and rumors about a possible tie-up between Virgin Mobile USA and SK Telecom's MVNO Helio, Virgin Mobile has finally come forward and announced that the two are in preliminary talks. Virgin Mobile's brief statement characterizes the talks as "in early stages" and cautions that no transaction may result. The MVNO said it will have no further comment on the talks unless a definitive agreement takes place. Just yesterday, SK Telecom denied reports that it was in talks with Virgin Mobile USA about a possible tie-up.

If Virgin Mobile USA were to acquire Helio, it would mark the end of an era: Now that Mobile ESPN, Disney Mobile and Amp'd Mobile have ceased MVNO operations, Helio is the last big MVNO in operation from the content-heavy class of virtual operators.

For more:
- read Virgin Mobile's statement about Helio talks

Introducing the "new" Clearwire

Wed, 07 May 2008 06:59:58 -0400

After months of rumors and speculation, the deal that the mobile WiMAX industry has been hoping for finally became a reality. This morning Sprint and Clearwire announced that they will be combining their WiMAX businesses and creating a new company that will include a $3.2 billion investment from Intel, Google, Comcast, Time Warner Cable, Bright House Networks and Trilogy Equity Partners. The deal is complex, so here's a breakdown of the key elements:

The "new" Clearwire: The new company will be named Clearwire. It will include Sprint's Xohm unit. Sprint will contribute its 2.5 GHz spectrum to the new Clearwire in exchange for an ownership stake in the new company. Clearwire CEO Ben Wolff will be the CEO of the new Clearwire. Barry West, Sprint's CTO and Xohm business unit leader will be the president. The new company will include staff from both the existing Clearwire and Sprint Xohm business unit. Headquarters will be in Kirkland, Wash., with significant presence and R&D in Herndon, Va.

MVNO deals: Comcast, Time Warner, Bright House and Clearwire will operate as MVNOs selling Sprint 3G services. But unlike the former Pivot JV, these players will sell the 3G wireless services using their own brand names. Once the 4G WiMAX network is built, Comcast, Time Warner, Bright House and Sprint will be MVNOs on the Clearwire network.

Sprint's role: Sprint won't be involved in the day-to-day operations of Clearwire but as the largest shareholder it will have input on the portfolio and the go-to-market strategy.

Intel: Intel will work with manufacturers to embed WiMAX chips into laptops and devices. It will also have the option to enter into a 3G or 4G wholesale agreement with Clearwire and Sprint if it wants too.

Google: Google will partner with Clearwire on an open Internet business model. Clearwire will support the Android operating system. In addition, Google will be the default provider of Web and local search on Sprint's network and Sprint will preload several Google services including Google Maps for mobile, Gmail and YouTube. Like Intel, Google will have the option to have a 3G or 4G wholesale agreement with Clearwire or Sprint if it wants too.

For more details
- see this press release.

Click here to see a timeline of the Sprint/Clearwire WiMAX deal.

Click here to see a chart depicting Clearwire's new spectrum position.

Virgin Mobile USA: Poor earnings economy's fault

Tue, 06 May 2008 06:59:56 -0400

Virgin Mobile USA weathered a difficult first quarter as net service revenue declined 5.8 percent year-on-year to $303.8 million, because of a downturn in the economy, the MVNO said. The decline was also partly due to Virgin Mobile's decision in the fourth quarter of 2007 "not to invest in temporary, aggressive handset pricing engaged in by certain competitors," according to the carrier's press release. Despite the downturn, Virgin expects to produce growth in profitability during 2008.

Net income: Virgin Mobile posted $4.7 million in net income, down from $19.2 million this time last year. The MVNO blamed lower top up streams related to the decline in consumer spending.

New subscribers: The MVNO added 795,575 gross new subscribers, down from 881,756 in the first quarter of last year. Virgin now has 5.1 million total subscribers.

Churn: Average monthly churn, or customer turnover was 5.1 percent, as expected.

ARPU: Average revenue per user for Q1 came in at $19.93, down from 2007's first quarter ARPU of $22.41.

For more:
- read this release on Virgin Mobile USA's Q1 2008 results

Virgin Mobile's share price surges 34 percent

Thu, 01 May 2008 06:59:56 -0400

The New York Stock Exchange asked Virgin Mobile USA to explain a 34 percent gain in its share yesterday, but the MVNO declined to offer an explanation. The company said it does not comment on unusual market activity. Since going public last October, Virgin Mobile USA's share prices had declined from a high of $16.63 to a low of $1.90. Some 932,000 shares of the company were traded yesterday, up from the daily average of 538,000 shares.

For more on the 34 percent price hike:
- read this report from the AP

Virgin Mobile USA looks to layoffs?

Thu, 17 Apr 2008 06:59:55 -0400

- Click here for photos of Sir Richard Branson's CTIA 2008 Keynote

- Read our interview with Virgin Mobile's CEO Dan Schulman here

After an initial report over at VentureBeat set off a number of reports that Virgin Mobile USA might layoff as many as 300 of its 450 employees, the MVNO has denied that it is mulling massive layoffs. According to Virgin Mobile's VP of Corporate Communications Jayne Wallace, however, the MVNO is considering the possibility of "reshaping or outsourcing" its IT division. That said, Virgin Mobile has "made no final determinations" regarding the issue so it's still premature to speculate on details, according to Wallace.

CrunchGear has posted what looks to be an internal memo from Virgin Mobile USA CEO Dan Schulman that estimates 30 IT employees might be moved to IBM's offices but will continue working on the MVNO's systems.

For more on the potential layoffs:
- read this article from VentureBeat
- check out this article from CrunchGear

On the Hot Seat with Virgin Mobile USA CEO Dan Schulman

Tue, 15 Apr 2008 13:27:46 -0400

Ever since Virgin Mobile USA went public last fall, the MVNO has been under fire from financial analysts. The company was chastised when it reported a net loss of $14.7 million during the fourth quarter last year and reported fewer net new customer adds than expected. Virgin Mobile USA CEO Dan Schulman blamed "economic conditions" for the loss and warned that the conditions will continue to affect the consumer market and wireless industry during 2008. FierceWireless editor Brian Dolan talked with Schulman at last month's CTIA Wireless 2008 conference in Las Vegas about Virgin's troubles.

FierceWireless: How is the slowing economic environment affecting Virgin Mobile USA?

Schulman: There is a real fear that a slowing economic environment will lead wireless users to cut back on usage. It doesn't have to be though. The real issue and key to [Virgin Mobile USA's] value proposition is that it's tailor made for this kind of environment. Just because we're in a difficult economic environment doesn't mean we should cut back on our offerings. So our new service plans show that we're not sitting still, that we are still innovating. If you're like 75 percent of the U.S. population, you're using 200 minutes to 1000 minutes per month. So we're sticking to our roots--flexibility--and offering great values without having to sign long-term contracts--like our 5 cents-a-minute plans. For $50 a month, a customer can now get 1000 minutes with rollover. That's new for a prepaid offering.

FierceWireless: How has Virgin Mobile USA changed since going public? Any comments on the economic downturn and Virgin Mobile USA's share price?

Schulman: We try not to operate any differently because we are a public company. We still try very hard to put customers first. But, of course, we also have new constituencies like public shareholders and we think hard about that constituency. We believe that the best way that we can best serve them is by hyper-serving our customers. Look, we're not happy with the share price. We went public in October [2007] and that's pretty much when the economy started showing strains-in the fourth quarter. Those strains manifested themselves in the first quarter [of 2008]. It has been a difficult time to go public. The ability to provide good long-term forecasts suffers in a changing environment. We tried very hard in our last call to give conservative guidance and acted under the assumption that the difficult economic times will last through the entire year. At the same time we are confident and determined that if we stay true to providing customers with flexibility, then we will come out of 2008 strongly positioned to enter 2009.

I would point out, though, that Virgin Mobile has made a lot of progress over the past three years.Ã‚Â [Virgin Mobile USA] isÃ‚Â just shy of being a Fortune 1000 company. This was the first year of profitability and the first year we were free cash flow positive. Sure, growth is not what we had hoped it would be, but if that's because we continue to offer flexibility to consumers then we believe that philosophy will help us come out of this on top.

FierceWireless: Regulatory issues in the wireless industry have been top stories as of late. Ã‚Â Does Virgin Mobile get involved with issues (like the open access provision for the 700 MHz auction) or does is hang back because it's an MVNO?

Schulman: We do get involved in regulatory issues more than you might imagine. We are one of the leading advocates for privacy. We make sure that every transaction is required to have a PIN number, that way it's hard to steal other people's identity. We also pushed quite hard to make sure [Universal Service Fund] rules are not discriminatory against low income customers. So we do believe in basically championing what customers want and we can focus on that since we don't have an embedded network to defend. That does provide a tremendous amount of freedom by not having to have one to protect so we can exist to provide what customers want. Maybe we can do that in an innovative way and with a focus that no one else has because we have no network. But being at the forefront of these issues is very important to us. We aren't against VoIP-types of solutions since we don't have a postpaid minute base to protect.Ã‚Â Ã‚Â

There has been a lot of talk about open networks and handsets being unlocked in the past year. We believe that at the high end of the market--where somebody is willing to spend $200 to $300 for a handset-those users ought to have the flexibility to move from one carrier to another. However, on the prepaid side of the market, low and middle income households can't afford these higher prices so subsidies [on handsets] are critical to allow penetration into these households. Also, if you force everyone to unlock all phones, and you can no longer subsidize them at the low end, then you are going to take out a chunk of the market that has yet to be penetrated. It's a much, much more nuanced situation than many publications are making it out to be.

FEATURE: On the Hot Seat with Virgin Mobile USA CEO Dan Schulman

Tue, 15 Apr 2008 06:59:53 -0400

FierceWireless: How is the slowing economic environment affecting Virgin Mobile USA?

Click here to read the rest of the interview...

ROK drops bid to acquire MVNO Xero Mobile

Fri, 29 Feb 2008 06:59:57 -0500

For the past 14 months MVNO Xero Mobile has planned to launch mobile services in the U.S. that were either free or cheap because of ad-support, but no services were ever launched. Recently ROK Entertainment announced its intent to acquire the MVNO, but the company has now dropped its bid on the MVNO. ROK is a U.K.-based mobile media company centered on on-demand mobile video.

For more on the fate of Xero:
- read this press release from ROK

Related Articles:
SEC probes Xero Mobile. Article
Xero Mobile appoints Allen Brown CEO. Article

Helio: Losses up, revenue up too

Fri, 29 Feb 2008 06:59:56 -0500

Mobile virtual network operator Helio continues to hemorrhage cash...but on the bright side, its 2007 revenues increased 264 percent over the previous year. In its annual report to the SEC, Internet service provider EarthLink, which launched Helio in conjunction with Korean mobile operator SK Telecom, notes Helio lost $327 million in 2007 against $171 million in revenue; a year ago, the MVNO posted losses of $192 million on $47 million of revenue, which combined with 2005 losses of $42 million means Helio has now posted total losses of $560 million in three years. Helio ended the fourth quarter with slightly more than 180,000 subscribers, a 28 percent increase over Q3 totals. But while revenue still exceeded Helio's $140-$170 million guidance, and losses fell shy of its $340 million to $360 million guidance, EarthLink admits in the SEC filing it "may not realize the benefits we sought from our investment in the Helio joint venture."

The EarthLink filing goes on to note "We have made $210 million of cash investments in Helio. The financing of Helio's operations has adversely affected our cash position. In addition, Helio will require additional funding in the future and Helio has incurred losses and we expect Helio to continue to incur losses. In addition, Helio may not be successful in implementing and marketing its wireless voice and data initiatives, and there can be no assurance that these initiatives will be commercially successful. We cannot assure you Helio will be able to achieve or maintain adequate market share or revenue or compete effectively." -Jason

For more on Helio's 2007 results:
- read this Silicon Alley Insider article

Related articles:
Helio gets Buzzd.
Sky Dayton resigns as Helio CEO.
SK Telecom pumps another $270M into Helio.