Mere hours after being recommended by a money-saving expert from the Mail on Sunday, ad-funded mobile virtual network operator Samba Mobile announced that it is closing down due to the high cost of data.
"Samba is closing principally due to the high cost of wholesale data," the company said on its website. "This makes the current model of offering a meaningful value exchange of mobile broadband unsustainable."
Samba, which used network capacity from 3 UK, was launched in 2012 to provide ad-funded mobile broadband services for laptops, netbooks and iPads. The Mail on Sunday noted that Samba Mobile had offered 3.5 MB of credit for every advert viewed, "which is worth roughly enough to view 10 web pages and send 33 emails".
Samba Mobile said its data service will shut down with immediate effect. It added there is no guarantee it will be able to switch data back on unless negotiations with partners result in lower costs for the company.
The MVNO stressed that it had been in negotiations with its wholesale data partners to try and come to a deal, but said this has not been possible. "We have to pay for data in advance and, as we have reached the end of the latest billing period without agreement on lower costs, we have had to stop offering our service with immediate effect," the company explained.
Analyst Ben Wood from CCS Insight told FierceWireless:Europe that the economics of an ad-funded MVNO are tough and noted that Samba Mobile is not the first to fail. "Like Ovivo and Blyk it seems it could not make the business case add up," Wood said.
Ovivo Mobile operated on the Vodafone UK network, but closed down its operations in March. Little has also been heard from Blyk since 2012, shortly after the company relaunched its operations.
Reactions to the Samba Mobile closure came fast and furious on social media, with some subscribers saying that the offer of free data simply was not attractive enough in view of the data options that could be obtained directly from 3 UK.
"When customers are getting so many free minutes and text as well as healthy bundles of data which can be used to tether other devices, the economics of a discounted ad-funded service become less attractive. The sheer competitiveness of the broader UK mobile market likely contributed to Samba Mobile's difficulties," commented Wood.
With the number of corpses building up, is there a viable future for wannabe ad-funded MVNOs?
"Samba Mobile needed to keep customers engaged in order to satisfy the demands of its advertisers--I suspect that initial enthusiasm tailed off and the viewing figures for its ads were dropping while some customers just lost interest and stopped using the service all together," Wood said.
As Wood also pointed out, Vodafone's CEO, Vittorio Colao, recently expressed his scepticism about smaller MVNOs. "[He] questioned why networks would continue to support them in future if they continued to undercut service pricing," Wood said.
For more:
- see this statement by Samba Mobile
- see this Mail on Sunday article
Related Articles:
Czech Republic's MVNO boom continues apace in 2014
Virgin Mobile joins France's LTE bun fight
Saudi regulator to re-tender Zain MVNO licence
E-Plus embraces OTT partnerships with WhatsApp SIM
Blyk promotes Eric Kip to CEO