MVNO shakeout: RadioShack discontinues wireless service, Spot Mobile shuts down

RadioShack confirmed that it has discontinued its RadioShack No-Contract Wireless brand, which it launched in 2012 through a partnership with Leap Wireless. In separate but related news, the T-Mobile US (NYSE:TMUS) MVNO Spot Mobile said it has decided to wind down its business and will shut off service to customers by Sept. 7.

The actions point to continued turmoil in the MVNO and prepaid wireless space as Tier 1 network operators lower their prices to compete more directly with the smaller, prepaid MVNOs and wireless brands that typically chase the cost-conscious segment of the market.

For RadioShack, the shuttering of its prepaid brand comes as little surprise. The company overall has struggled with sluggish sales, leading it to contemplate shutting down hundreds of retail stores. Moreover, Cricket provider Leap Wireless was earlier this year acquired by AT&T Mobility (NYSE: T).

"We continually refine and evaluate our product mix and make changes to our offerings to better align with customer demands," RadioShack said in a statement to FierceWireless. "As part of these on-going evaluations, we will no longer offer the RadioShack No Contract devices. Customers who purchased the service will be able to continue using the current devices and RadioShack will honor the 30-day return policy in store."

"Customers who purchased service from RadioShack will continue to receive excellent service from Cricket Wireless," said a Cricket representative in an email to FierceWireless.

RadioShack No Contract Wireless launched with feature phones and smartphones, and offered plans ranging from $25 a month for 300 voice minutes plus unlimited messaging and Web access to $60 per month for unlimited talking, texting, Muve Music and 2.5 GB of data before throttling. While the offering was branded as RadioShack and sold through the company's channels, Leap Wireless provided the service as well as the billing. Thus, RadioShack No Contract Wireless wasn't a standard MVNO service because MVNOs typically purchase network access in bulk from network owners, and then the MVNOs handle the subscriber billing and customer management.

Spot Mobile though was a standard MVNO. On its website, the company announced that it will discontinue service next month. "Spot Mobile had a contract with an underlying carrier that matured and was going through a sale which did not materialize," the company wrote on its site. "The Company has made the decision to wind down its business and will no longer be processing refills. Customer's account/services will terminate effective September 7th, 2014 at 11:59pm (EST)."

The details of Spot's shutdown are unclear and attempts to reach company officials were unsuccessful.

RadioShack and Spot aren't the only companies having trouble in the MVNO and prepaid space. T-Mobile MVNO Solavei announced in June that it filed for Chapter 11 bankruptcy protection. Company officials explained that Solavei launched with a structure built to support millions of customers, but that it had only garnered 101,500 customers as of May 31.

For more:
- see this PrepaidPhoneNews article
- see this Spot Mobile website

Related Articles:
Solavei's CEO: Bankruptcy has caused 'very little attrition' among MVNO's 101,500 customers
RadioShack CEO Gooch departs amid retail struggles
RadioShack launches branded wireless service through Leap's Cricket
Sprint, T-Mobile execs explain the MVNO explosion