MVNO Market Continues to Grow
Mobile virtual network operators (MVNOs) are poised to capture more market share from U.S. wireless service providers in coming months, but the long-term success of many MVNOs is far from assured, according to a new study released by Heavy Reading.
"U.S.-based MVNOs are well positioned to gain market share as consolidation reduces the number of conventional wireless operators," the report notes, adding that the number of companies offering MVNO services is likely to soar in the next 12 months. "As the MVNO field gets more crowded, the first-mover advantage with specific demographic groups is likely to dissipate. This will make it difficult for smaller MVNOs to compete with newcomers that may have more recognizable brands, particularly emerging competitors from the retail and entertainment industries."
Other key findings from MVNO Marketing Outlook 2005 include the following:
U.S.-based MVNOs are well positioned to gain market share as consolidation reduces the number of conventional wireless operators. The acquisition of AT&T Wireless by Cingular, the pending merger of Sprint PCS and Nextel, and Alltel's pending acquisition of Western Wireless will reduce the number of carriers serving 4 million or more customers from eight to five. Having fewer conventional operators should make it easier for MVNOs to establish brand awareness in their target customer segments.
Competition among the big five wireless carriers for MVNO wholesale minutes should be favorable to the MVNO model. Carriers such as Cingular and Sprint have been aggressive in forging wholesaler relationships with MVNOs. Despite consolidation among facilities-based wireless operators, the need for those operators to bolster their network utilization and revenues through wholesale agreements should give MVNOs enough leverage to bargain for favorable pricing for the foreseeable future.
MVNO success will hinge on the ability to market effectively to niche audiences. North American MVNOs are specifically targeting consumers with poor credit, users of international long distance, and young people. Key niche markets -- covering demographics previously considered undesirable by wireless carriers due to their low credit characteristics and exotic usage profiles - are going to attract a lot of attention this year."
Posted to the site on 15th June 2005
