Virgin Mobile Undercuts Everyone

Bernie — Tue, 24 Jun 2008 14:39:05 -0400

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.

Death of MVNO Model Predictions Premature

Bernie — Fri, 28 Sep 2007 00:00:00 -0400

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.