Virgin Mobile, the prepaid wireless MVNO, has undercut all wireless carriers with their latest wireless plan. The “Totally Unlimited” plan will launch on July 1 for $79.99/month, and will offer unlimited domestic calling. For an additional $10/month, customers can add unlimited text messaging. The $79.99 plan undercuts most existing unlimited plans by $20. Another appealing aspect to Virgin’s plan is the lack of any contract.

Virgin typically appeals to value and credit challenged customers. It remains to be seen if their typical demographic will see this plan as appealing, and from a competitive standpoint, will it impact the efforts of the $99 plan group. For consumers who need pure wireless voice minutes in bulk, this plan may look quite appealing. Additionally it’s “risk free” nature may have an impact on AT&T and Verizon’s voice only unlimited $99 plans.

Embarq has decided that its wireless partnership with former corporate parent Sprint is no longer attractive. Embarq was hoping to gain 1 million wireless customers and has only achieved 112K to date. They've essentially decided to let the wireless business "die." They'll continue selling devices and plans until everything runs out, and then shut the business down. Existing wireless customers will probably migrate over to Sprint. The move isn’t an encouraging one for the MVNO model, at least as it applies to large carriers like Embarq. When hearing news like this, it’s easy to dismiss the MVNO model entirely, but I’m not ready to do that yet. It’s also bad news for Sprint, at least from a PR point of view. Embarq joins Qwest in ditching Sprint as a wireless partner. Sprint’s MVNO business has suffered highly visible partnership failures, including Qwest, Pivot Wireless, and now Embarq. To be fair, probably the most successful North American MVNO play, Virgin Mobile, is also affiliated with Sprint.

While the Sprint MVNO model hasn’t worked for Embarq, for many smaller ILEC’s, the MVNO model is the only game in town, provided a pure play ILEC wants to get in the wireless business. It’s a difficult business to crack. The ILEC partner, particularly small ones, are at the mercy of the larger wireless carriers, and are usually low on the totem poll in priority. Finding the right business model, where both wireline and wireless partner can prosper to their respective expectations has proven to be elusive. Yet, it’s still too early to give up. Wireline carriers recognize that the future of the business lies in wireless and broadband, not in wireline voice. Most ILECs have the broadband part covered. Those who want to also hedge their bets with wireless need to find an MVNO model that works. Early indications suggest that wireless can help maintain competitiveness. AT&T and Verizon are only beginning to maximize their competitive advantage with wireless, and their future looks promising. Recent news also suggests that the cable industry intends to find the right wireless strategy as well. So while MVNOs are taking a lot of heat of late, there could and should still be a positive future with them, provided those who are interested work to persevere and find a winning business model. Good luck!

MVNO success examples are few and far between in the U.S. Several factors contribute to this mixed bag of success. One factor that plays a primary role is mobile device availability, or lack thereof. MVNO operators have limited access to the devices that are in most demand. Strategy Analytics has published a report suggesting that WiMAX may be a good fit for MVNOs, due in part to this handset issue.

The WiMAX ecosystem in the U.S. is pushing for open access, meaning any WiMAX enabled device should be able to access a WiMAX network. Intel, Samsung, and Motorola have committed to producing 50 million WiMAX devices by year end 2010. The availability of WiMAX devices at the retail level, free from carrier restriction, could put WiMAX devices in the hands of millions of consumers, of which many will be eager to connect to a WiMAX network. "A WiMAX MVNO could, in principle, let their customers use any WiMAX-certified device they wanted to," says Ben Piper, Director of the Strategy Analytics Broadband Network Strategies service. WiMAX MNVOs may then have an advantage – potential customers who have their own equipment. Removing the hassle of handset availability and inventory is one that cellular MVNOs would welcome. A successful WiMAX MVNO model could empower many more carriers, especially landline carriers with few wireless assets, to successfully enter the wireless business and impact the competitive landscape significantly. Of course, this is all theory at this point. Currently, WiMAX devices are almost non-existent, and a clear WiMAX business model, never mind a WiMAX MVNO model, has yet to emerge. But this potential scenario will be worth watching as the competitive broadband wireless landscape continues to evolve.

The recent announcement by Disney to pull the plug on their second MVNO (ESPN Mobile was the first) has many an analyst predicting the death of the MVNO model. While the MVNO graveyard is littered with high profile failures, including ESPN, Amp’d Mobile, and now Disney, the business model is far from dead. Perhaps the shining success example is Virgin Mobile, but there are certainly others.

The MVNO model may be a great business school case study. It makes for great study and analysis, with extreme failures and solid success stories. Perhaps a low profile with a slow and steady approach may be the winning strategy. Failing MVNOs seem to share similar characteristics: high profile public relation campaigns, tons of cash and investment (accompanied with obscene burn rates), and high (perhaps unrealistic) expectations. On the contrary, successful MVNOs like Virgin Mobile seem to generate press only when warranted, utilize conservative cash burn rates, and don’t create overly high expectations. Other successful examples include Embarq, and to a lesser extent, Qwest. Both have been able to weave wireless into their bundling strategies, using Sprint’s wireless network. When’s the last time you’ve seen a big splash or headline for Embarq’s wireless play? There are also a number of successful MVNO’s that target niche markets. For many smaller and independent carriers in the U.S., MVNO’s are their only mobile wireless option (at least for the time being). Those carriers would welcome an MVNO model that is win-win and profitable. Ultimately, all things being equal, telecom carriers would like to build and own their own wireless network. But wireless’ tremendous CAPEX and OPEX requirements put it out of reach but for a handful of carriers. Until such time that these requirements can be overcome, MVNO’s will be of interest. The headlines over the past year not withstanding, the MVNO model is very much alive.

Amp’d Mobile may have seen its last days. They are notifying visitors to their website that they will be shutting down operations on July 24th, and subscribers need to port their number elsewhere. We reported in early June about Ampd’s bankruptcy, and it appears as if their run is over. Verizon Wireless, Ampd’s wholesale provider has pulled the plug on them, making their network inoperable. Like a previous failed MVNO, ESPN Mobile, we are likely to see Amp’d as a former shell of itself somewhere else, providing content for a more established wireless provider.

H.E. Butt Grocery Co., also known as H-E-B, a San Antonio, TX based grocer is launching its own branded mobile service, H-E-B Mobile. H-E-B operates more than 300 stores in Texas and northern Mexico and has more than 63,000 employees.
H-E-B Mobile will offer prepaid service through a partnership with Fusion Mobile, which is an MVNO itself, through its relationship with Telispire. Quite a tangled web we weave. H-E-M Mobile is obviously trying to leverage its relationship with customers that fit the prepaid wireless demographic. It’s a tactic that’s been employed by other retailers, including 7-11, with mixed success. Yet another entrant in the highly competitive prepaid wireless segment.

Read more in this San Antonio Business Journal article.

The news over the weekend that Amp’d Mobile has filed for bankruptcy adds to the unfortunate news of MVNO’s over the past year. Amp’d joins Mobile ESPN as probably the two highest profile stumbles in the MVNO market. Amp’d raised $360 million dollars, which leads everyone to the next question – how did they burn through so much cash in less than a year? Mobile ESPN has been revived as a shell of its former self as ESPN MVP on the Verizon Wireless network. All eyes are now on Helio, another high profile MVNO, which is a joint venture between Earthlink and SK Telecom of Korea.

Both Amp’d and the former Mobile ESPN relied heavily on multimedia content (as does Helio) as a competitive differentiator. This begs the question - does the market want these bells and whistles on their cell phone? Or is this more a question of business plan execution (or lack thereof) by these high profile ventures? Perhaps the answers lie with Virgin Mobile USA, which appears to be the one MVNO who has executed a well planned prepaid business model, attracting over 4.6 million subscribers. They know their market and keep it simple. Is that the winning combination?