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  1. #1
    John Navas
    Guest
    <http://www.theregister.com/2006/08/14/mvno_bubble_bursting/>

    The much hyped bubble in MVNOs (Mobile Virtual Network Operators) in
    the US is close to bursting, according to new research from Strategy
    Analytics.

    It has found that many of the best funded MVNOs have misunderstood
    their core target markets, and that, while the better established,
    youth oriented outfits like Virgin Mobile, Tracfone and Sprint
    Nextel's Boost have thrived, the new breed - such as EarthLink/SKT's
    Helio, Disney Mobile and Mobile ESPN - have adopted more ambitious
    business models but have failed to capture the consumers'
    imaginations.

    The heavily marketed new entrants have "failed to learn lessons from
    their predecessors. The handsets are boring, pricing uninspired, and
    the distribution strategy is flawed. This is a threefold recipe for
    failure," writes Strategy Analytics' David Kerr.

    At the end of 2005, Tracfone, Virgin and Boost accounted for 65 per
    cent of the US MVNO market, relying on the prepaid services that
    their youth audience prefers. The new wave does not look set to make
    much dent in this market share in 2006, and already all the big names
    have been forced to adapt their business models to put more emphasis
    on basic voice services and less on advanced data and multimedia
    options - which consumers may buy as extras, but do not want bundled
    into a standard price that then looks expensive.

    [MORE]

    --
    Best regards, FAQ FOR CINGULAR WIRELESS:
    John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>



    See More: NEWS: MVNO bubble about to burst in the US?




  2. #2
    Isaiah Beard
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    John Navas wrote:
    > <http://www.theregister.com/2006/08/14/mvno_bubble_bursting/>
    >
    > The much hyped bubble in MVNOs (Mobile Virtual Network Operators) in
    > the US is close to bursting, according to new research from Strategy
    > Analytics.
    >
    > It has found that many of the best funded MVNOs have misunderstood
    > their core target markets, and that, while the better established,
    > youth oriented outfits like Virgin Mobile, Tracfone and Sprint
    > Nextel's Boost have thrived,



    Virgin and Boost have thrived because their "host" networks don't offer
    a prepaid service of their own. If you want prepaid Sprint service, you
    MUST get Virgin. If you want a prepaid iDEN handset with PTT, you MUST
    get Boost.

    And TracFone has survived because it pioneered the prepaid concept, and
    thrives now because it has a mature distribution network, and is
    ubiquitous in stores like 7-Eleven, Target and Wal-Mart. They
    successfully attract the lowest common denominator of the wireless
    market: teenagers and those adults with no or absolutely abominable
    credit who cannot get or cannot deal with postpaid service. Yet the
    risk is virtually zero because those customers must pay up front.

    It probably also helped that TracFone clung to TDMA to the bitter end
    before finally offering a GSM handset lineup. For a good while they
    were selling refurbs and manufacturer discards of old TDMA models that
    they received for practically nothing and sold for a tidy profit.


    > the new breed - such as EarthLink/SKT's
    > Helio, Disney Mobile and Mobile ESPN - have adopted more ambitious
    > business models but have failed to capture the consumers'
    > imaginations.


    I didn't see a point in these MVNOs, because at their base they are
    merely re-treads of the host carriers. Even the handsets are the same,
    albeit with different color schemes and sometimes a re-done user interface.


    >
    > The heavily marketed new entrants have "failed to learn lessons from
    > their predecessors. The handsets are boring, pricing uninspired, and
    > the distribution strategy is flawed. This is a threefold recipe for
    > failure," writes Strategy Analytics' David Kerr.
    >
    > At the end of 2005, Tracfone, Virgin and Boost accounted for 65 per
    > cent of the US MVNO market, relying on the prepaid services that
    > their youth audience prefers. The new wave does not look set to make
    > much dent in this market share in 2006, and already all the big names
    > have been forced to adapt their business models to put more emphasis
    > on basic voice services and less on advanced data and multimedia
    > options - which consumers may buy as extras, but do not want bundled
    > into a standard price that then looks expensive.
    >
    > [MORE]
    >



    --
    E-mail fudged to thwart spammers.
    Transpose the c's and a's in my e-mail address to reply.



  3. #3

    Re: NEWS: MVNO bubble about to burst in the US?


    Isaiah Beard wrote:
    > John Navas wrote:
    > > <http://www.theregister.com/2006/08/14/mvno_bubble_bursting/>
    > >
    > > The much hyped bubble in MVNOs (Mobile Virtual Network Operators) in
    > > the US is close to bursting, according to new research from Strategy
    > > Analytics.
    > >
    > > It has found that many of the best funded MVNOs have misunderstood
    > > their core target markets, and that, while the better established,
    > > youth oriented outfits like Virgin Mobile, Tracfone and Sprint
    > > Nextel's Boost have thrived,

    >
    >
    > Virgin and Boost have thrived because their "host" networks don't offer
    > a prepaid service of their own. If you want prepaid Sprint service, you
    > MUST get Virgin. If you want a prepaid iDEN handset with PTT, you MUST
    > get Boost.
    >
    > And TracFone has survived because it pioneered the prepaid concept, and
    > thrives now because it has a mature distribution network, and is
    > ubiquitous in stores like 7-Eleven, Target and Wal-Mart. They
    > successfully attract the lowest common denominator of the wireless
    > market: teenagers and those adults with no or absolutely abominable
    > credit who cannot get or cannot deal with postpaid service. Yet the
    > risk is virtually zero because those customers must pay up front.
    >
    > It probably also helped that TracFone clung to TDMA to the bitter end
    > before finally offering a GSM handset lineup. For a good while they
    > were selling refurbs and manufacturer discards of old TDMA models that
    > they received for practically nothing and sold for a tidy profit.
    >
    >
    > > the new breed - such as EarthLink/SKT's
    > > Helio, Disney Mobile and Mobile ESPN - have adopted more ambitious
    > > business models but have failed to capture the consumers'
    > > imaginations.

    >
    > I didn't see a point in these MVNOs, because at their base they are
    > merely re-treads of the host carriers. Even the handsets are the same,
    > albeit with different color schemes and sometimes a re-done user interface.


    The services are often "second hand" that have been tested by the
    postpaid
    crowd and debugged. For $80/year one gets basic service of about 320
    minutes and the emergency usage capability. Many users
    determine that a prepaid service is cheaper for them.

    JG




  4. #4
    Larry
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    Isaiah Beard <[email protected]> wrote in news:12e74c3o9fgk060
    @corp.supernews.com:

    > If you want a prepaid iDEN handset with PTT, you MUST
    > get Boost.
    >


    Will a Boost phone talk to a Nextel user group? I'd be interested in
    that....

    --
    There's amazing intelligence in the Universe.
    You can tell because none of them ever called Earth.



  5. #5
    SMS
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    [email protected] wrote:

    > The services are often "second hand" that have been tested by the
    > postpaid
    > crowd and debugged. For $80/year one gets basic service of about 320
    > minutes and the emergency usage capability. Many users
    > determine that a prepaid service is cheaper for them.


    The other ones that have thrived financially, if not in market share,
    are the ones that _don't_ spend money on marketing, but have lower
    prices. I.e., $80 will get you about 600 minutes a year on PagePlus or
    the old BeyondWireless. These MVNO's probably only have a few employees,
    no advertising expenses, and minimal customer service expenses.

    The heavily hyped MVNOs are usually the worst in terms of coverage. Look
    for a CDMA/AMPS MVNO that allows roaming,



  6. #6
    Joseph Huber
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    On Wed, 16 Aug 2006 17:43:30 -0400, Isaiah Beard wrote:
    >And TracFone has survived because it pioneered the prepaid concept, and
    >thrives now because it has a mature distribution network, and is
    >ubiquitous in stores like 7-Eleven, Target and Wal-Mart. They
    >successfully attract the lowest common denominator of the wireless
    >market: teenagers and those adults with no or absolutely abominable
    >credit who cannot get or cannot deal with postpaid service.


    TracFone attracts more than just teenyboppers and credit-risk adults.
    I know adults that have impeccible credit who use TracFone. They are
    only occasional cell phone users and they have determined that their
    cellphone usage doesn't justify even the cheapest monthly plans that
    are required to get service from the big players. They don't really
    care what others might think of them for using TracFone. All they
    want a cell phone for is voice.

    I heard an "industry analayst" on NPR a few weeks ago make a
    statement along the lines that the big players like Cingular, Verizon,
    and Sprint only want customers who spend $50-$60+ per month, and they
    really don't worry too much when the lose a customer who spends less
    than that. I would venture to guess that there is quite a market of
    folks who would like cell service but can't justify that kind of
    money.
    Joe Huber
    [email protected]



  7. #7
    danny burstein
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    In <[email protected]> Joseph Huber <[email protected]> writes:

    >I heard an "industry analayst" on NPR a few weeks ago make a
    >statement along the lines that the big players like Cingular, Verizon,
    >and Sprint only want customers who spend $50-$60+ per month, and they
    >really don't worry too much when the lose a customer who spends less
    >than that.


    It's even trickier than that. when a cellular customer
    calls a wired phone, the originating company has
    to pay a "termination" or completion fee to the
    final destination company.

    If that second person is using a cell phone in the
    same network, there's no such expense. Similarly, if
    the phone is in an MVNO with an affiliation contract
    to the first compaany, the costs are less. (And there
    are some cross-cell-company agreements as well).

    So... it's in the cellular ocmpanies interests to
    get those cheaper phones out there, even if the
    user isn't a primary customer of theirs.

    --
    _____________________________________________________
    Knowledge may be power, but communications is the key
    [email protected]
    [to foil spammers, my address has been double rot-13 encoded]



  8. #8
    reemusk
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    or, an open area to test Sprint's family locator features....i.e. Disney
    Mobile
    "Isaiah Beard" <[email protected]> wrote in message
    news:[email protected]
    > John Navas wrote:
    > > <http://www.theregister.com/2006/08/14/mvno_bubble_bursting/>
    > >
    > > The much hyped bubble in MVNOs (Mobile Virtual Network Operators) in
    > > the US is close to bursting, according to new research from Strategy
    > > Analytics.
    > >
    > > It has found that many of the best funded MVNOs have misunderstood
    > > their core target markets, and that, while the better established,
    > > youth oriented outfits like Virgin Mobile, Tracfone and Sprint
    > > Nextel's Boost have thrived,

    >
    >
    > Virgin and Boost have thrived because their "host" networks don't offer
    > a prepaid service of their own. If you want prepaid Sprint service, you
    > MUST get Virgin. If you want a prepaid iDEN handset with PTT, you MUST
    > get Boost.
    >
    > And TracFone has survived because it pioneered the prepaid concept, and
    > thrives now because it has a mature distribution network, and is
    > ubiquitous in stores like 7-Eleven, Target and Wal-Mart. They
    > successfully attract the lowest common denominator of the wireless
    > market: teenagers and those adults with no or absolutely abominable
    > credit who cannot get or cannot deal with postpaid service. Yet the
    > risk is virtually zero because those customers must pay up front.
    >
    > It probably also helped that TracFone clung to TDMA to the bitter end
    > before finally offering a GSM handset lineup. For a good while they
    > were selling refurbs and manufacturer discards of old TDMA models that
    > they received for practically nothing and sold for a tidy profit.
    >
    >
    > > the new breed - such as EarthLink/SKT's
    > > Helio, Disney Mobile and Mobile ESPN - have adopted more ambitious
    > > business models but have failed to capture the consumers'
    > > imaginations.

    >
    > I didn't see a point in these MVNOs, because at their base they are
    > merely re-treads of the host carriers. Even the handsets are the same,
    > albeit with different color schemes and sometimes a re-done user

    interface.
    >
    >
    > >
    > > The heavily marketed new entrants have "failed to learn lessons from
    > > their predecessors. The handsets are boring, pricing uninspired, and
    > > the distribution strategy is flawed. This is a threefold recipe for
    > > failure," writes Strategy Analytics' David Kerr.
    > >
    > > At the end of 2005, Tracfone, Virgin and Boost accounted for 65 per
    > > cent of the US MVNO market, relying on the prepaid services that
    > > their youth audience prefers. The new wave does not look set to make
    > > much dent in this market share in 2006, and already all the big names
    > > have been forced to adapt their business models to put more emphasis
    > > on basic voice services and less on advanced data and multimedia
    > > options - which consumers may buy as extras, but do not want bundled
    > > into a standard price that then looks expensive.
    > >
    > > [MORE]
    > >

    >
    >
    > --
    > E-mail fudged to thwart spammers.
    > Transpose the c's and a's in my e-mail address to reply.






  9. #9
    Isaiah Beard
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    Joseph Huber wrote:

    > TracFone attracts more than just teenyboppers and credit-risk adults.
    > I know adults that have impeccible credit who use TracFone. They are
    > only occasional cell phone users and they have determined that their
    > cellphone usage doesn't justify even the cheapest monthly plans that
    > are required to get service from the big players. They don't really
    > care what others might think of them for using TracFone. All they
    > want a cell phone for is voice.


    While I agree with that statement, this market demographic is NOT how
    TracFone makes the majority of their profit. It is nice holding onto to
    someone's prepaid money for a while, but the revenue only really pours
    in from those who are moderate to heavy users of cell service, but have
    no other choice than to go prepaid and thus pay TracFone significantly
    more than the person who only uses their phone once a month or less.

    >
    > I heard an "industry analayst" on NPR a few weeks ago make a
    > statement along the lines that the big players like Cingular, Verizon,
    > and Sprint only want customers who spend $50-$60+ per month, and they
    > really don't worry too much when the lose a customer who spends less
    > than that.


    That's largely correct. $50-60 a month is the "sweet spot" where a
    postpaid cell carrier begins to recoup their investment. Below that, it
    becomes hard to justify giving someone a free or discounted phone, and
    then continuing service. And while they may not actively kick you off
    their service (well, except for Cingular), they won't necessarily go out
    of their way to keep you, either.


    > I would venture to guess that there is quite a market of
    > folks who would like cell service but can't justify that kind of
    > money.


    I would say that Virgin Mobile, Boost and TracFone give one the ILLUSION
    of saving money, but often times their per minute rates are slightly
    higher than what you would get in postpaid service. Additionally, they
    do force a minimum purchase as well; if you don't use your prepaid
    minutes in time, or at least pour in more money and "top up" your
    account, the minutes expire and you lose what you paid for. If you've
    only used five minutes out of a $10 prepaid card and allow the rest to
    expire, then you've effectively paid $2.00 a minute for the privilege of
    using prepaid.


    --
    E-mail fudged to thwart spammers.
    Transpose the c's and a's in my e-mail address to reply.



  10. #10

    Re: NEWS: MVNO bubble about to burst in the US?


    Isaiah Beard wrote:
    > Joseph Huber wrote:
    >
    > > TracFone attracts more than just teenyboppers and credit-risk adults.
    > > I know adults that have impeccible credit who use TracFone. They are
    > > only occasional cell phone users and they have determined that their
    > > cellphone usage doesn't justify even the cheapest monthly plans that
    > > are required to get service from the big players. They don't really
    > > care what others might think of them for using TracFone. All they
    > > want a cell phone for is voice.

    >
    > While I agree with that statement, this market demographic is NOT how
    > TracFone makes the majority of their profit. It is nice holding onto to
    > someone's prepaid money for a while, but the revenue only really pours
    > in from those who are moderate to heavy users of cell service, but have
    > no other choice than to go prepaid and thus pay TracFone significantly
    > more than the person who only uses their phone once a month or less.
    >
    > >
    > > I heard an "industry analayst" on NPR a few weeks ago make a
    > > statement along the lines that the big players like Cingular, Verizon,
    > > and Sprint only want customers who spend $50-$60+ per month, and they
    > > really don't worry too much when the lose a customer who spends less
    > > than that.

    >
    > That's largely correct. $50-60 a month is the "sweet spot" where a
    > postpaid cell carrier begins to recoup their investment. Below that, it
    > becomes hard to justify giving someone a free or discounted phone, and
    > then continuing service. And while they may not actively kick you off
    > their service (well, except for Cingular), they won't necessarily go out
    > of their way to keep you, either.
    >
    >
    > > I would venture to guess that there is quite a market of
    > > folks who would like cell service but can't justify that kind of
    > > money.

    >
    > I would say that Virgin Mobile, Boost and TracFone give one the ILLUSION
    > of saving money, but often times their per minute rates are slightly
    > higher than what you would get in postpaid service. Additionally, they
    > do force a minimum purchase as well; if you don't use your prepaid
    > minutes in time, or at least pour in more money and "top up" your
    > account, the minutes expire and you lose what you paid for. If you've
    > only used five minutes out of a $10 prepaid card and allow the rest to
    > expire, then you've effectively paid $2.00 a minute for the privilege of
    > using prepaid.


    VM accounts don't expire as long as you top up, and one can save up
    for heavier internet usage or photo xfers. $80/year beats standard
    contract commitments anytime.

    >
    >
    > --
    > E-mail fudged to thwart spammers.
    > Transpose the c's and a's in my e-mail address to reply.





  11. #11
    John Richards
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    "Isaiah Beard" <[email protected]> wrote in message news:[email protected]
    > I would say that Virgin Mobile, Boost and TracFone give one the ILLUSION
    > of saving money, but often times their per minute rates are slightly
    > higher than what you would get in postpaid service. Additionally, they
    > do force a minimum purchase as well; if you don't use your prepaid
    > minutes in time, or at least pour in more money and "top up" your
    > account, the minutes expire and you lose what you paid for. If you've
    > only used five minutes out of a $10 prepaid card and allow the rest to
    > expire, then you've effectively paid $2.00 a minute for the privilege of
    > using prepaid.


    How much it costs per minute is not pertinent, except perhaps
    as an academic exercise. ;-)
    The significant thing is that you can find prepaid plans for as low
    as $6.75 per month. None of the postpaid providers will come
    even close to that monthly cost.

    --
    John Richards



  12. #12
    Jim Burks
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    "Joseph Huber" <[email protected]> wrote in message
    news:[email protected]
    > On Wed, 16 Aug 2006 17:43:30 -0400, Isaiah Beard wrote:
    > TracFone attracts more than just teenyboppers and credit-risk adults.
    > I know adults that have impeccible credit who use TracFone. They are
    > only occasional cell phone users and they have determined that their
    > cellphone usage doesn't justify even the cheapest monthly plans that
    > are required to get service from the big players. They don't really
    > care what others might think of them for using TracFone. All they
    > want a cell phone for is voice.
    >
    > I heard an "industry analayst" on NPR a few weeks ago make a
    > statement along the lines that the big players like Cingular, Verizon,
    > and Sprint only want customers who spend $50-$60+ per month, and they
    > really don't worry too much when the lose a customer who spends less
    > than that. I would venture to guess that there is quite a market of
    > folks who would like cell service but can't justify that kind of
    > money.
    > Joe Huber


    I am one of these. I could afford any phone service I choose, but my wife
    wants a phone for emergencies - about 3-6 1min calls per week. Virgin Mobile
    with auto top-up is 25c/min with a minimum of one $15 top-up per quarter.
    That means we can have a working CDMA phone and number for $60/year. And the
    best part is, the Nokia phone was $19.99 last Christmas. If I needed a Nokia
    battery, I'd buy a ppd phone, get the battery out, and throw the phone away.

    Jim Burks





  13. #13
    Isaiah Beard
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    [email protected] wrote:

    >
    > VM accounts don't expire as long as you top up, and one can save up
    > for heavier internet usage or photo xfers.


    Perhaps, but that still doesn't help the demographic that rarely uses
    their phone and only wants it for emergencies. If you're continually
    topping up the phone and not using all of that built up usage, you're
    goving the MVNO free money.

    > $80/year beats standard
    > contract commitments anytime.


    Perhaps. But it's still money thrown away. You would think that if
    someone's usage is low enough, they might just be better off "bumming" a
    phone off someone else in the rare instance they need to make a call.



    --
    E-mail fudged to thwart spammers.
    Transpose the c's and a's in my e-mail address to reply.



  14. #14
    Todd Allcock
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    At 23 Aug 2006 11:21:39 -0400 Isaiah Beard wrote:
    > [email protected] wrote:
    >
    > >
    > > VM accounts don't expire as long as you top up, and one can save up
    > > for heavier internet usage or photo xfers.

    >
    > Perhaps, but that still doesn't help the demographic that rarely uses

    their phone and only wants it for emergencies. If you're continually
    topping up the phone and not using all of that built up usage, you're
    goving the MVNO free money.

    Not really- that MNVO does have costs involved maintaining the account.

    > > $80/year beats standard
    > > contract commitments anytime.

    >
    > Perhaps. But it's still money thrown away. You would think that if

    someone's usage is low enough, they might just be better off "bumming" a
    phone off someone else in the rare instance they need to make a call.
    >

    Many low volume users maintain prepaid phones for glove box "emergency"
    use. If you knew in advance when you were going to have an emergency,
    you wouldn't need a cellphone- you could just stay home! ;-)>

    $80/year is cheap "just-in-case" insurance, though I suspect you could
    find cheaper (i.e. T-Mobile PPD is $100 the first year, then $10/year
    thereafter.)




    --
    Posted via a free Usenet account from http://www.teranews.com




  15. #15
    John Navas
    Guest

    Re: NEWS: MVNO bubble about to burst in the US?

    On Wed, 23 Aug 2006 21:39:47 -0600, Todd Allcock
    <[email protected]> wrote in
    <[email protected]>:

    >Many low volume users maintain prepaid phones for glove box "emergency"
    >use. If you knew in advance when you were going to have an emergency,
    >you wouldn't need a cellphone- you could just stay home! ;-)>
    >
    >$80/year is cheap "just-in-case" insurance, though I suspect you could
    >find cheaper (i.e. T-Mobile PPD is $100 the first year, then $10/year
    >thereafter.)


    For true emergencies all you need is an inactive phone, since the FCC
    mandates that 911 calls always be served.

    --
    Best regards, FAQ FOR CINGULAR WIRELESS:
    John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>



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