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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.

Wireless: it's complicated

Sue Marek — Fri, 27 Jun 2008 09:00:46 -0400

It appears Google is learning a hard lesson about wireless--the cell phone industry is very complex and difficult to negotiate. Earlier this week the Wall Street Journal reported that the firm's Android software suite will likely not show up on handsets until late 2008, as opposed to its original plans to debut Android in the second half of the year. T-Mobile USA reportedly won't deliver its Android-powered phone until fourth quarter, Sprint and China Mobile will likely be delayed with their Android-powered phones until late 2008 or early 2009.

While some argue that this isn't really a delay, Android never expected to make its debut earlier than year-end, the gist of the story--that Google underestimated the complexity of the wireless industry--is interesting to me. Why? Because I've heard it so many times before.

When mobile TV was first getting its legs, hundreds of content firms contacted me to tell me about how they were going to deliver their video content to cell phones. Many of those companies are no longer around because they underestimated the complexity of the wireless industry. Getting their technology to work across the many different networks and devices proved more costly and cumbersome than any had anticipated.

The same can be said for the big brand names that launched wireless services as mobile virtual network operators. Even though they had the foresight to realize that building a wireless network was too expensive and too complex, Mobile ESPN, Disney Mobile, Amp'd and now Helio (see related story below) vastly under-estimated how expensive and difficult it is to market and distribute wireless services to consumers, in a market that is already saturated with well-known incumbents.

As the mobile Internet begins to take flight, I suspect that many of Internet heavyweights will begin to realize what Google is learning--the mobile Internet is not the traditional Internet and yes, wireless is complicated. Newcomers to the industry need to have deep pockets and patience if they want to succeed in wireless. --Sue

Convergys acquires Visage's MVNE business

Sue Marek — Thu, 22 May 2008 11:41:38 -0400

With all the fallout among the MVNO segment, it's not surprising that MVNO enabler (MVNE) Visage Mobile was ready to put some of its assets on the block. Today Visage announced that is sold its subscriber management business to billing vendor Convergys. The two companies have been partners and Convergys will now combine Visage's technology with its own billing platform.

Visage's subscriber management business was used by several MVNOs, including Disney Mobile and Mobile ESPN, which are no longer in existence. Earlier this year, Visage switched gears and launched its MobilityCentral software solution, a product that is targeted to enterprises that need assistance monitoring and managing their mobile assets.

For more:
- See this press release

Related stories:
More on Disney Mobile: mPortal, Pantech, Brightpoint. See this Disney Mobile story.
Visage Mobile raises $30M. See this Visage story.

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

ALSO NOTED: Groups call on FTC for mobile marketing safeguards. Crush or Flush bows on T-Mobile USA; and much more...

Wed, 07 May 2008 06:59:50 -0400

> Groups call on FTC for mobile marketing safeguards.

> ESPN, New York Times mobile sites win Webbys

> Crush or Flush bows on T-Mobile USA

And finally... Saturday Night Fever goes mobile via Player X. Article

Helio CEO Sky Dayton steps down

Tue, 29 Jan 2008 06:59:57 -0500

Mobile virtual network operator Helio announced that founding CEO Sky Dayton has resigned his post, with president and COO Wonhee Sull named as his replacement. Dayton was appointed non-executive Chairman of Helio's Board of Directors--the company said he will remain actively involved in shaping its strategy and initiatives. "Helio has reached a point in its development where I feel the timing is right for this change," Dayton said in a statement.

Dayton's move will no doubt further speculation that EarthLink (the ISP he founded in 1994) is planning to sell its stake in Helio, which it launched in association with Korean operator SK Telecom. Last fall EarthLink president and CEO Rolla Huff reiterated the company's commitment to Helio: "I think that the investment that we've made there absolutely has value," Huff insisted at the time. "We have no plans to go out and sell it. It's a growing business. It's a business that we support."

In announcing Dayton's resignation, Helio also reported usage statistics for its nearly 200,000 subscribers, claiming an ARPU of $85 and a 2007 revenue run rate of over $240 million based on December actuals. Helio also reported:

An average of over 550 text messages per member per month
95 percent of subscribers access the web via mobile device
Each month, 60 percent of subscribers access MySpace via Helio and average nearly 500 page views
In December, subscribers uploaded photos from their device to the web at a rate of five times the industry average
57 percent of Ocean users downloaded Helio's exclusive YouTube application within two weeks of its launch -Jason

For more on Dayton's resignation:
-read this release

Related articles:
SK Telecom pumps another $270M into Helio
Helio squashes rumors of massive layoffs
Helio to succeed where Mobile ESPN failed?
Helio adds online content, feels the Heat
Helio reveals plans, partners for mobile gamingÃ‚Â Ã‚Â

Disney Mobile Japan unveils handsets

Tue, 22 Jan 2008 06:59:57 -0500

Disney has finally opened the kimono for its planned MVNO launch in Japan by unveiling the service's initial three mobile phones. Disney claims to be "extremely confident" in achieving success as the country's first MVNO, despite the high-profile debacles of ESPN Mobile and Disney Mobile in the U.S. The company plans to launch the MVNO, which will be called Disney Mobile, on March 1. The service is a joint venture with Softbank. Japan's Sharp made the three phones, which are adorned with silhouette patterns of Mickey Mouse. The phones also include a dedicated button that sends subscribers directly to Disney websites as well as Disney themes and icons for wallpaper.

For more on the Disney Mobile launch in Japan:
- read this article from the AFP

The MVNO love affair is over

Fri, 21 Dec 2007 06:59:55 -0500

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.

Putting Technology to the Test

Sat, 27 Oct 2007 06:59:59 -0400

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Putting Technology to the Test

Heading up high-profile MVNO Mobile ESPN was quite a learning experience for Manish Jha, formerly the senior vice president and general manager of the firm, which shut its doors in September 2006. Jha, who is now the CEO of Vantrix, a multimedia software firm that sells its technology to carriers, content players and service delivery platform makers, says one of the most important lessons he gleaned from his tenure at the MVNO was that consumers like multimedia content but they are very price conscious. "Instead of trying to make a lot of money from a few people, we spent time analyzing how to make a little money from a lot of people," Jha said. "Being able to scale in this business from a content perspective is complicated."

Jha believes his firm has found a solution to growing the mobile content ecosystem and driving consumer adoption and it is putting its technology to test in front of a very critical audience: the attendees at next week's CTIA Wireless I.T. & Entertainment conference in San Francisco.

Vantrix, which teamed with CTIA, will be offering conference-goers access to an exclusive video featuring Edge, the lead guitarist from the rock group U2. Attendees will just have to enter a short code and Vantrix's software will be able to determine whether they have a video-enabled phone. If so, they will receive a copy of the video with an exclusive track that can be saved as a ringtone or sent to a friend. When I spoke with CTIA Vice President of Operations Rob Mesirow late last week, he was on his way to Los Angeles to work with Edge on the video, which he expects to be a huge hit at the show. "If we can get 10,000 people to view this, it will be the most-watched mobile video in history," Mesirow said.

The CTIA executive doesn't think that number will be difficult to surpass given the nature of the CTIA crowd. "If 50 percent of all mobile devices can watch this, I anticipate more than 90 percent will be able to watch it at the show," Mesirow said, adding that the San Francisco confab will likely attract more than 20,000 attendees. Ã‚Â

Mesirow wouldn't say for sure if Edge would be a surprise guest at next week's conference but he did say that there will be lots of big announcements. I'm expecting next week's show to keep the Fierce reporters very busy. I'll be attending the conference, along with my colleagues Jason Ankeny, Brian Dolan, Mehan Jayasuriya and Mike Dolan. Be sure to say hello if you see us at the panel sessions, on the exhibit floor or at one of the many after-hours parties.

Speaking of parties, be sure to attend FierceWireless' party at the Mezzanine in San Francisco on Oct. 24. It's the best networking event at the show and always attracts a stellar crowd. RSVP here: http://www.fiercewireless.com/events/unionaffairÃ‚Â -Sue

P.S. Count on Fierce to bring you all the news and scoop from San Francisco. We are the official online show daily for CTIA I.T. Wireless & Entertainment 2007 and we'll deliver everything you need to know in our regular newsletters and at a custom micro-site titled "CTIA Live!" Click here to check out the website.

ESPN opens its mobile playbook

Mon, 22 Oct 2007 06:59:58 -0400

Sports giant ESPN is continuing its full-court press into the mobile space. Speaking Monday at the Mobile Entertainment Live! event in San Francisco, ESPN senior vice president of digital video and mobile John Zehr said the network's wireless efforts cater to passionate sports fans "who want to experience [sports] wherever they are," emphasizing the importance of video services to deliver a rich consumer experience. "We're foremost a television company--what we do is all about storytelling," Zehr said. "What better palette to tell a story than the video screen?"

Like so many speakers at what is rapidly proving to be a low-energy, unfocused industry event, Zehr admitted ESPN has yet to determine the best game plan for delivering sports fans a mobile experience that satisfies customer priorities while maximizing the possibilities of the wireless platform, citing interactive programming as a niche that may ask too much of the average subscriber. "Consumers are going to dictate how you deliver content to them," Zehr said. "We're trying to figure out the right engagement level. We've learned there's a large group of people who simply want to lean back and be entertained."

According to Zehr, the question facing the mobile industry is whether consumers truly want an escapist experience delivered via the same device that keeps them connected with the workplace and related segments of day-to-day modern life. "Can the mobile device transcend from a tool for work into how I decide to spend my time away?" he asked. "Whether or not those two things can work together is an interesting thing to think about. Maybe these devices aren't meant to serve both masters."Ã‚Â Ã‚Â

SPOTLIGHT: ESPN opens its mobile playbook

Mon, 22 Oct 2007 06:59:52 -0400

Content to go

Wed, 03 Oct 2007 09:22:26 -0400

Telephone companies are becoming TV providers to maintain their businesses in the face of landline loss to cell phone use. But the migration never ends. Cell phone providers are intent on transmitting video to handheld devices, as evidenced by the number of mobile content sessions coming up at CTIA's Wireless I.T. & Entertainment Summit in San Francisco Oct 23-25.

The mobile content movement doesn't necessarily portend a massive audience shift to 2-inch screens, however. Most television executives consider it additive, but the jury is still out.

There's nothing particularly new about mobile video. MobiTV announced its initiative years ago. ESPN jumped into mobile content provision early on with mixed results, and came back for a second round. Verizon launched mobile video in the form of VCast Video over its regular data network, then as VCast TV over the much more efficient and effective network offered by Qualcomm's MediaFLO.

For content providers of all flavors--broadcast or cable networks, IP video purveyors, even syndicators--mobile devices represent merely another platform. So it is that broadcast networks, which still have the highest ratings and therefore the most to lose from platform migration, nonetheless have plunged head-long into mobile content deals. Some of the deals involve shows specifically produced for the small screen, while others offer repurposed regular telecasts. It should be noted, however, that only one repurposed telecast--"60 Minutes"--is among the 20 highest rated shows, a list populated mostly by dramas and NFL games.

The networks have their collective toes in the mobile content market because they see, like everyone else, the potential to either gain eyeballs or herd them somehow back to the TV set. What has yet to be demonstrated is the demand for mobile video content. VCast Video initially launched as a $10 add-on. People shrugged, or took it for a month or two, and then shrugged. MediaFLO-enabled VCast TV is $13 to $25 a month, and it's not the only game in town.

iPhone users have YouTube content, which may lend itself more favorably to a small screen if one is inclined to pony up $400 for a cell phone. If so, it would make just as much sense to get a WiFi-enabled handset and watch YouTube videos the wireless broadband way.

Then again, wireless broadband could have further implications for telcos just now launching IPTV offerings, but substantial erosion is unlikely. As nascent as the mobile TV market remains, one thing holds true--people like to watch TV on a TV set. Just as YouTube video is painful to watch on a 52-inch HD plasma, so too is minimally converted, high-motion landscape footage wastefully watched on a cell phone. Cell phone TV is unlikely to take a huge chunk out of the traditional TV business, but telcos just getting into the space might want to consider an MVNO, just to be on the safe side. --Deborah

P.S. FierceMarkets will bring you all the news and scoops from the CTIA I.T. Show. We are the official online show daily for CTIA. We will deliver all the news in our regular issue and at a custom micro-site entitled "CTIA Live!" Click here to check out the website.

Disney Dumps MVNO

Fri, 28 Sep 2007 06:59:59 -0400

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Disney dumps MVNO

Within an hour yesterday of hearing that Walt Disney Co. had shuttered its Disney Mobile MVNO, my email in-basket suddenly filled with notes from a handful of existing MVNOs asking me to speak with them. Their mission was clear: they want to distance themselves from Disney Mobile and all the other high-profile MVNOs that have failed over the past year by telling me why their business will succeed. It's tough to be an MVNO when all your peers are closing their doors.

Disney Mobile's closing comes as little surprise. For those of us following this segment over the past few years, we've watched the MVNO business model rise and fall. The MVNO strategy, once touted as the next great growth opportunity in the wireless industry, is now disdained after high-profile failures of initiatives such as Mobile ESPN and Amp'd Mobile.

To be fair, I know that companies like Walt Disney Co. didn't enter the MVNO business on a whim. They took their time and studied the market before making the leap. I visited the Disney Mobile team at their offices in Los Angeles two years ago and I remember talking to George Grobar, who was heading up the Disney Mobile effort. He clearly understood the complexity of the wireless market and he realized that the company would be competing for subscribers that may already have family plan contracts with existing operators. Nevertheless, he thought they could lure those subscribers away with innovative content and special services such as the family finder LBS application.

But two years ago everyone was bullish on the MVNO model. Analyst reports (even the most cautious ones) were predicting that the U.S. market would support dozens of MVNOs. Obviously many well-respected companies got caught up in the hype.

I empathize with the remaining MVNOs but I'm still very cynical about this business model. I think the U.S. mobile market is highly penetrated and traditional operators are not going to forego certain niche markets to MVNOs. We've already seen all the Tier 1 operators aggressively target the Hispanic market with their services. And just recently Verizon Wireless launched a handset called the Coupe and two rate plans specifically targeted at the senior market. I suspect we'll see more of these carrier-driven initiatives directed toward specific markets in the year ahead. -Sue

Disney Mobile shutters its doors

Fri, 28 Sep 2007 06:59:58 -0400

Another one bites the dust. The Walt Disney Company announced today that it is closing the operations of its Disney Mobile MVNO, which launched early last year. The company shut down its other MVNO, Mobile ESPN in September 2006, a mere eight months after it launched. Disney Mobile commercially launched in June 2006. While the financials surrounding the Disney Mobile closure have not been disclosed, Disney said it had invested $150 million into Mobile ESPN prior to its closure, and the closure cost an additional $30 million, according to a report in the Wall Street Journal.

Disney Mobile offered branded services to both kids and their parents. While the kids enjoyed various Disney-themed services, ringtones and games, parents were given advanced monitoring tools like a GPS-enabled Family Locator. Like Amp'd Mobile before it, Disney plans to offer some of these mobile applications through other carriers. Disney already has such a deal in place with Verizon Wireless through its Mobile ESPN brand.

Disney's decision comes after Amp'd Mobile's bankruptcy filing earlier in the year, but just one week after SK Telecom invested an additional $150 million in its MVNO, Helio, to keep it afloat. SK co-owns Helio with Earthlink, but Earthlink did not opt to invest in Helio this time around.

For more on Disney's decision to shutter its MVNO:
- read this press release
- read this article from the WSJ

Disney to decide its other MVNO's future

Tue, 18 Sep 2007 06:59:56 -0400

Walt Disney's CRO Thomas Staggs said that the Disney MVNO has faced "some challenges," and now the parent company is "in the process of evaluating where we sit." Staggs made the comment during an appearance at the Merrill conference in Marina del Rey, according to a report in Silicon Alley Insider. Staggs added that the MVNO business lacks the scale necessary to be successful. While Staggs declined to project Disney Mobile's losses in 2008, he said that the upcoming budgetary analysis will help Disney "decide just what our plan is going forward." Disney terminated its Mobile ESPN MVNO service a year ago this month.

For more on Disney Mobile's future:
- read this Silicon Alley Insider article

Related Articles:
Disney release metrics for Disney MVNO Article
A sit down with Disney's Larry Shapiro Interview

MVNO Movida pockets $40M in VC

Thu, 23 Aug 2007 06:59:56 -0400

Hispanic MVNO Movida has raised $40 million in venture capital from Plainfield Asset Management and the Cisneros Group of Companies. The MVNO, which launched in 2005, now claims more than 250,000 subscribers. Movida says the funding will help "sustain the company's rapid growth."

"Movida has demonstrated a strong ability to build allegiance and loyalty to its brand among Hispanic consumers in a relatively short amount of time," said Les Levi, Partner, Plainfield Asset Management.

For more on the VC round:
- read this press release

Related Articles:
MVNO model a bust. Article
Amp'd to join ESPN in MVNO graveyard. Article
Jitterbug, the anti-MVNO. Article

SPOTLIGHT: ESPN tells employees to stick with AT&T

Thu, 19 Jul 2007 06:59:52 -0400

An ESPN internal memo informs employees that despite the big deal with Verizon Wireless for ESPN Mobile, ESPN employees should stick with AT&T because it works overseas and the rates are the same, if not better. Article

Editor's Corner

Tue, 03 Apr 2007 20:01:39 -0400

The User-Generated Business Model
I suspect the launch of Sonopia won't be the last instance of a user-generated business model in the wireless space. Sonopia's plan to empower any individual, company or organization to launch their own MVNO is a bold move, but one that is met with some skepticism from an industry wary of the MVNO model. You won't see ESPN signing up, for example.

It took user-generated content to get online video offerings into the mainstream and peer-to-peer file swapping sites to alert the music industry that online music sales might be a big business. Will it take a user-generated MVNO site to make that business model work too?

Forrester Research analyst Charles Golvin seems to think so. He said that within a few years, as many as 10 million U.S. wireless users, which is just under 5 percent of all Americans with handsets, will get their service from Sonopia and its partners. While that metric is a difficult one to swallow this early in the company's official existence, others seem more promising:

It costs a carrier about $300 dollars in marketing to sign up a new subscriber. Sonopia hopes to avoid those costs altogether by relying on affinity groups that potential users already belong to, allowing their partners to do the marketing for them. Existing MVNOs like Amp'd and Helio have each required hundreds of millions of dollars to get their services up and running. Sonopia has built the tools to enable their subscribers to build the content and broadcast their respective messages, but it has only raised $9 million in funding.

Sonopia, as of this writing, boasts 529 "Sonopias" (which is what the site calls its UGC MVNOs) since launching earlier this week. It is not clear from the site how many of these Sonopias include mobile users, since anyone can create a potential MVNO on the site without actually signing up for the mobile service. We'll keep an eye on Sonopia's growth as it looks to corner that 10 million subscriber figure, and be on the look out for an MVNO targeting the avid sports fan. -Brian

Mobile ESPN resurfaces through Verizon Wireless

Wed, 07 Feb 2007 19:01:38 -0500

ESPN, the first high-profile casualty of the MVNO market, is relaunching through an exclusive deal with Verizon Wireless. The multi-year agreement between the two gives Verizon Wireless exclusive U.S. rights to offer the Mobile ESPN application on its V Cast phones. The two companies also plan to launch an ESPN broadcast TV channel--on Qualcomm's MediaFLO network--that will include much of the same content being shown on the popular sports cable network.

Verizon Wireless will launch the V Cast offering in the coming months and will bundle the service in the $15-per-month or $3-per-day fee it charges for V Cast. The deal is a huge win for Verizon because content firms generally shy away from exclusive carrier agreements, preferring instead to offer their content across all operators and reach as many eyeballs as possible. Likewise, offering content through Verizon is a much better fit for ESPN. Despite being one of the most well-known brands around, consumers didn't want to buy an ESPN-branded phone to access ESPN content. Verizon Wireless says it expects ESPN will drive adoption for V Cast services.

In an interesting aside, Manish Jha, formerly the senior vice president and general manager of ESPN Mobile, has landed a new gig. He is now the CEO of Vantrix Corp., a Montreal-based mobile media firm.

For more about the deal between Verizon Wireless and ESPN:
- check out this article from AP

Editor's Corner

Thu, 21 Dec 2006 19:01:39 -0500

It's the end of the year and that means it's time to reminisce about what happened during the past year and whether the Top 5 predictions I made in January about the industry were on target, totally missed the mark or fell somewhere in between.

Here's how I scored:

1. Not everyone will make it in the MVNO market. I have to say I got an "A" on this one. Mobile ESPN was the first casualty, and the market quickly soured on these once industry darlings. What I said in January holds true: It's a tough market when virtual carriers have to acquire customers less expensively to make a return on the investments in their own wireless platforms such as billing, customer care and network switching. Those focused heavily on data and content are required to make some significant investments around unique content and sophisticated marketing. ESPN was one of the most well-known brands around, but consumers just didn't want to buy an ESPN-branded phone to access ESPN content. The big brands that people thought would bring in the customers just don't cut it in the ultra-competitive mobile phone world. Amp'd Mobile and Helio have reported some interesting ARPU numbers and subscriber additions, but they can't be labeled successes yet.

2. Can municipal WiFi deliver what the politicians promise? I give myself a "B" on this one. We did see several public WiFi business models work in 2006, but other municipalities, especially San Francisco, which has spent the entire year working on a deal with Google/Earthlink, learned the value of due diligence. Muni-WiFi is so hot that telecom companies like AT&T who once staunchly opposed them have joined the game. Still, these networks are fairly new, and there are still a lot of questions about what type of loads they can handle, especially those based on single radios. Cities are also learning about what business models are most realistic.

3. Like it or not, mobile advertising is coming. I have to give myself an "A" on this one. Operators know they need advertising to expand data consumption and generate more data revenues as monthly recurring charges for content begin to hit the ceiling. I predicted that we'd see many experiments in this area as carriers delicately look for ways to create acceptance of wireless advertising without turning off the customer. There were a plethora of advertising-related announcements. Virgin Mobile introduced in May Sugar Mama, an advertising initiative that allows its young customers to sign up for the offering through Virgin Mobile USA's website for three types of advertising: text messaging, video ads and questionnaires, and use those options to earn up to 75 free minutes of talk time per month. Yahoo and go2 Directory Systems made a deal to put Yahoo-sponsored listings on the go2 Directory local-search website carried by Verizon Wireless, Sprint and Cingular Wireless. Enpocket developed a custom-built solution for Sprint Nextel to allow the operator to integrate advertisements into the carrier's WAP deck. But the bottom line is that the industry is a long way from seeing a big impact from mobile advertising. It still gets a bad rap.

4. Mobile high-speed networks fight for laptops, extend lead over WiMAX. I was partially right, but I have to give myself a "D." I said that as operators continue to lower their pricing for data access, we will see 3G begin to usurp WiFi data consumption. Well, consumers' desire for WiFi only got stronger--to the point where they now expect it in most public locations. Meanwhile, there was little downward movement on the 3G data pricing front. Sprint Nextel made an attempt by unbundling data access from voice plans while Verizon has been offering pay-as-you-go pricing to customers who buy certain notebooks with embedded EV-DO capabilities.

I also said that WiMAX will make its debut in the fixed wireless world but will fail to make a significant impact on the wireless market as a whole since vendors aren't expected to introduce any significant volume of mobile WiMAX equipment until later this year or early 2007. And I correctly predicted that the hype cycle would definitely turn in WiMAX's favor if Sprint Nextel chose the technology in the 2.5 GHz band.

5. MediaFLO vs. DVB-H: The battle for market position. I have to give myself a "B+" on this. The winner of the stand-alone mobile TV network market just might be Qualcomm's MediaFLO. Everyone always thought it would wrap up CDMA operators Verizon Wireless and Sprint Nextel, but they weren't expecting GSM operators to jump on board. However, it looks like that just might be the case. It is public knowledge that T-Mobile is testing the service and now rumor has it that Cingular Wireless is looking into MediaFLO too. Meanwhile, things don't look too hot for DVB-H network operator Modeo, which has yet to receive an endorsement from a U.S. operator, and there hasn't even been a hint that any operator went so far as to conduct a market test. Modeo has embarked on a go-it-alone strategy with plans to launch its network in New York City. It's going to sell an unlocked GSM phone that supports the Modeo-branded mobile TV services. One surprising thing to me was the lack of technology bashing reminiscent of the GSM vs. CDMA debate. It's clear operators are looking at what provider can offer the best economics. 2007, however, will be the proving ground for this model.

Enjoy our year in review. Thank you for your readership in 2006. We look forward to serving you in the coming year. After a break next week, we will be back on January 2nd. Enjoy the holidays.-Lynnette