MVNOs will spur wireless market segmentation

The success story of Virgin Mobile has shown the wireless industry that any company with a strong brand and solid marketing can post impressive subscriber growth and generate real revenues through an MVNO deal. Carriers will continue to market their services to the same portion of the market that they currently control, leaving MVNOs to acquire new segments yet to be pinpointed. This past year saw MVNOs aimed at the youth market, sports fans, the rich, the youth market, and finally, the youth market. Some of the more interesting MVNO offerings this past year include:

  • easyMobile UK, which piggybacks on T-Mobile's network and is marketed toward people who want to make cheap calls and SMS. easyMobile ships SIMs to prepaid customers who must use their own handsets.
  • Verizon provided the network for an MVNO called CloseCall, aimed at the "underserved" tween market. The service enabled parental controls over inbound and outbound calling.
  • A Japanese mobile content company announced plans to start a luxury MVNO in the US that carries a $1500 sign-up fee and runs $500 a month. Subscribers get a new handset every few months and unlimited minutes and data usage.
  • ESPN's overly priced MVNO is drawing many comparisons to the aforementioned luxury service.
  • Youth-targeted Amp'd recently partnered with MTV, solidifying its chances to conquer the coveted youth market.
  • Also, P. Diddy claimed he was an MVNO at CTIA in New Orleans. Noted.

The carriers have remained smart, leaving these customers to consumer brands with a strong retail presence while making money from their reseller agreements. Those with the most MVNO deals, like Sprint, are in the best position to cash in on this trend. Cingular and Verizon Wireless have started to open up their networks. Serious questions remain as to how many MVNOs the market can support, and not everyone can be as successful as Virgin Mobile. U.S. MVNOs to date have focused on broader markets such as the prepaid market or the youth "lifestyle" market targeted by Virgin Mobile and Boost. Data strategies like Amp'd's are highly focused compared to the rest of the market. With backers and content providers like MTV Networks, however, Amp'd has a leg-up in terms of youth appeal.

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