Sprint Nextel (NYSE:S) has rapidly become the best friend of a new breed of MVNOs--from Republic Wireless to Ting, Voyager Mobile, TruConnect and FreedomPop. Granted, the number of customers that these MVNOs have is negligible in relation to the total number of U.S. mobile subscribers, but Sprint has developed a reputation as a solid partner for fledging and niche MVNOs to work with.
Now Sprint wants to significantly expand that reach. The carrier last week said it will allow any company to become an MVNO on its network (including its nascent LTE network). Unlike the MVNO heyday of the mid-2000s, I think this just might work, if Sprint can sign up a few marquee brands to become MVNOs.
The catch behind Sprint's new MVNO program, called Single Source Enablement, is that Sprint is promising to do almost everything for an MVNO besides go out and get customers. Sprint says its new turnkey program can include "all systems, processes, customer care, online Web enablement, and the warehousing and distribution of devices." Customer acquisition costs and other marketing seem to be all that's left.
And that's what makes Sprint's effort so promising. When Mobile ESPN flopped in 2006, many were quick to point out its failings: limited phone selection, expensive plans and not enough of a draw to justify the cost. But with Sprint handling all of the logistics, including device distribution, a huge chunk of the cost equation has been solved for would-be MVNOs, allowing them to focus on selling content and their brands via a wireless offering.
Matt Carter, president of Sprint's global wholesale and emerging solutions business, explained that there are many brands that want to add a wireless component--and another way to reach their customers--but don't want to deal with the complexity of running a wireless business. The question is, which companies are going to bite?
Analysts I spoke with, as well as Carter, agree that affinity groups are the most likely option. These include fans of a particular music star like Jay-Z, but also, and more likely, fans of a sports team. Imagine a Oklahoma City Thunder or Los Angeles Kings wireless service, complete with exclusive team content and videos. It would be akin to Mobile ESPN, except the teams wouldn't have to worry about customer care or device warehousing.
"The scale that they [Sprint] have now, by being able to open it up and take care of [the complexity] for you, makes it so much broader," said Current Analysis analyst Wes Henderek. "There were so many barriers to entry before and they've taken those down."
Why is Sprint doing this? Carter said it's a part of Sprint's corporate philosophy of openness, but it's also that Sprint is the No. 3 carrier and is looking to grow its business and subscriber base any way it can. "We recognize that not everyone is going to come to our brand," Carter said. "We want to enable those other brands that bring a unique value proposition to customers and enable to them to allow their customers to experience their brand in the mobile world."
Recon Analytics analyst (and FierceWireless columnist) Roger Entner noted that Sprint was an MVNO pioneer in the earlier gold rush, and now is looking to grab new customers by lowering costs, which he applauded. "They're willing to be more accommodating," he said.
There are some big unanswered questions. One is just how small Sprint's operation will go. Carter did not give a precise size, but said Sprint is looking to support a wide range of companies. "Certainly there is a threshold of subscribers that you have to get to break even," he said. "It's designed in a manner to really represent the wide range of opportunities. We're not relying on huge volume brands or small volume brands."
The other looming question is whether Sprint can get some big names to sign up for this new level of MVNO service. If a big brand goes with Sprint, others are likely to follow--and Sprint may yet usher in a new golden age of the MVNO. --Phil