mvnos – Techdirt (original) (raw)
Verizon Buys Tracfone As U.S. Wireless Gets Even More Consolidated
from the merge-ALL-the-things dept
As economists and experts had warned, the recent $26 billion Sprint T-Mobile merger effectively decimated the prepaid space. T-Mobile had already laid off around 6,000 employees at its Metro Prepaid division, with more layoffs expected. Many of the “mobile virtual network operators” that operated on Sprint’s network now face an uncertain future, with growing resentment in the space among prepaid vendors, who say T-Mobile is already using its greater size and leverage to erode commissions and to renegotiate their contracts for the worse. Many prepaid vendors are calling for help that most certainly won’t be coming any time soon from the Trump Federal Trade Commission (FTC) and Department of Justice?s Antitrust Division.
With that as backdrop, another major effort at wireless consolidation has emerged with Verizon’s announced purchase of Tracfone, one of the biggest prepaid vendors in the U.S. The $6.2 billion deal will, Verizon insists, result in “exciting and compelling” products in the years to come:
Yes, if there’s one word that American consumers have come to associate with major telecom mergers, it’s “excitement.”
The problem here, of course, is that the direct result of mindless M&A in the U.S. telecom space couldn’t be any more apparent. Less overall competitors means less effort to seriously compete on price. And the MVNO space had already been under relentless assault by companies like Verizon that have slowly but surely done their best to elbow out any smaller players that dare seriously compete on price with the major networks they must rely on to survive.
With the postpaid market saturated, wireless players are now forced to eek out growth wherever possible. In this case, via acquisitions, followed by only a superficial continued dedication to prepaid wireless lower-priced offerings. As part of the Tracfone deal, Verizon not only nabs 21 million Tracfone customers, but the company’s Net 10, Walmart FamilyMobile, SafeLink, Simple Mobile, Straight Talk Wireless, and Clearway prepaid brands as well.
Fewer major networks means less incentive than ever to negotiate on rates, roaming, or much of anything else. With Sprint (the most friendly company to MVNOs by a wide margin) now out of the picture, things have gotten more treacherous for smaller MVNOs than ever. Of course, if the U.S. stays close to its historical norm, in about five years U.S. wireless data (pre and postpaid alike) will be significantly higher, and everybody will be left standing around with a dumb look on their collective faces wondering what went wrong.
Filed Under: competition, mergers, mvnos, prepaid wireless, wireless
Companies: tracfone, verizon
Can We Close The Book On MVNOs Now?
from the or-will-they-rise-again? dept
Back in 2002, there was suddenly a lot of buzz about how MVNOs (Mobile Virtual Network Operators) were going to be the next big thing. The idea was that any brand could start offering mobile phone service just by slapping its brand on mobile phones that would work on someone else’s network. Then you could have a company with a huge brand jumping into the mobile phone space, adding various “synergies” (gag) from other business lines, without having to worry about the technical infrastructure of running a mobile network. The problem, which really was sort of obvious from early on, was that no one could explain why anyone would want to buy mobile phone service from a non-mobile phone company. And, indeed, all of the “big brand” MVNOs died rather gruesome deaths.
The second generation of MVNOs were supposed to be different however. Names like Amp’d and Helio weren’t building on existing brands, but planned to build up huge new brands by themselves, and would do so by focusing on the high end, offering all sorts of neat phones, applications and services that the big mobile operators were afraid to offer. Actually, the reality was that the big mobile phone operators knew enough to recognize that people just didn’t want those things, which is why they weren’t offered. Amp’d flamed out spectacularly, burning through $360 million and attracting a negligible number of customers.
And, now, Helio has basically given up the ghost as well, selling off to Virgin Mobile — about the only mobile phone MVNO that has managed to hang in there. From the sound of it, Virgin basically was doing a favor to Helio, to make its initial backers (Earthlink and SK Telecom) save a little face, rather than just shutting down the service.
So, with this, can we officially declare the era of the MVNO over? Or will we see breathless reports a year or two from now from new analysts in the space claiming a great new market in “branded” mobile phone services?
Filed Under: mvnos
Companies: amp'd, helio, virgin mobile
Kindle's Not All Bad: It Might Be A Turning Point For Non-Phone Wireless Devices
from the there's-always-something dept
I agree almost entirely with Tim Lee’s assessment of the Kindle e-book reader, posted Monday on these pages, but as a wireless and telecom analyst, there are aspects of the device that are interesting and important – unfortunately for Amazon, they aren’t going to help make the Kindle a success. The most interesting factor is that Amazon is basically launching an MVNO, called Whispernet that will use the Sprint EV-DO network. It certainly won’t be the first MVNO on Sprint, and it won’t be the first mobile device maker to brand the wireless service as their own (think Palm VII’s Palm.net, or Blackberry.net when they both resold Mobitex service). But the Kindle is one the first mainstream consumer electronics device we’ve seen that is not a computer and not a phone but which still connects to a mobile broadband network.
This portends a future (that Sprint has been talking up a lot lately with WiMAX) where myriad consumer electronics devices like cameras, GPS devices, sensors, signs, etc. all connect to the “cloud” and have service either bundled in retail prices, or into some other service fee like Amazon is charging for content. This kind of device is a break from the normally carrier-controlled handsets we usually see, and is interesting for that reason alone. It’s also a break from the $80 rule, where non-phones can only connect to cellular data for 80/mo.SincetheKindledevicehaslimitedInternetfunctionality,AmazoncanpredictaveragemonthlyEV−DOthroughputperdevice,andnegotiateamuchbetterwholesaledataratefromSprintthan80/mo. Since the Kindle device has limited Internet functionality, Amazon can predict average monthly EV-DO throughput per device, and negotiate a much better wholesale data rate from Sprint than 80/mo.SincetheKindledevicehaslimitedInternetfunctionality,AmazoncanpredictaveragemonthlyEV−DOthroughputperdevice,andnegotiateamuchbetterwholesaledataratefromSprintthan80, and can then afford to bundle that into content pricing. Don’t get me wrong — I don’t agree with the content pricing on the Kindle. But the launch of an “Open Access” consumer electronics device with wide area network access bundled in has got me excited. Imagine now a GPS device from Garmin or TomTom that comes with a cellular radio for traffic updates, local fuel prices, etc, and the data plan is bundled into the retail price. Wow! Consumer electronics devices that could work right out of the box with full mobile connectivity, and a carrier that is willing to wholesale reasonably for that network connection! The times are finally changing.