Not so long ago, MVNOs were all the rage. Everyone from 7-Eleven and Circle-K convenience stores to Disney and ESPN jumped on the bandwagon along with dozens of other brands both big and small.
Many of those operations, including the ones mentioned above, are defunct, but the MVNO bandwagon keeps rolling on. MVNOs today are likely to cater to particular niche groups, such as those based on country of origin or language, political leanings, military service, international travel and more. But where once the major mobile operators were only too happy to have MVNOs pay them for bulk minutes and data, now most of the operators are bringing low-cost, no-frills and even no contract services directly to customers, making it harder for MVNOs to break into the market and become successful. That increased competition has seen several MVNOs associated with T-Mobile recently go out of business, including brands from RadioShack, Spot Mobile and Solavei. China is faring little better. (Our most popular post ever was this one, ‘Five things that make operating an MVNO tough to do.‘
We’re also seeing some of the better known MVNOs making bold moves in their pricing structure, with Boost Mobile (Sprint) doubling the amount of data in its plans for $5 less; Metro PCS (T-Mobile) adding incentives for tablet customers and offering unlimited calls and text to Mexico for a flat rate; and Ting (Sprint) bringing an a la carte pricing structure to the market.
But is this enough for them to go up against the major operators as well as against each other? Slashing prices and offering more data is never a bad idea, but MVNOs will need to do more to avoid ending up as a footnote in mobile history.
This could include becoming more receptive to ads as part of the service. Much like Amazon’s ‘special offers’ Kindle models that include sponsored ads, MVNOs could look into a similar arrangement that would help them lower costs and then pass that along to the customer.
Another interesting business model for MVNOs is to rely mostly on Wi-Fi, thereby dramatically cutting costs. Republic Wireless offers a $5 a month Wi-Fi only plan as well as more expensive ones that include cellular data over Wi-Fi, 3G and 4G. The interesting approach here is that Sprint’s network is viewed as more of a failover rather than the primary method for customers to connect. With Wi-Fi offloading already becoming popular among the major operators, Republic simply found a way to make it work as a cheaper mobile option for customers.
MVNOs can also do more to go after the ‘unlocked’ phone market, giving customers who choose not to enter into contracts an option for service at a much lower cost than going through the operators. With MVNOs contributing significantly to the bottom lines of their operator partners, it will make good business sense for the operators to take a keener interest in who’s selling what across their network and even step in to help, even if it’s behind the scenes.
In the end, most customers probably don’t really care whether their bill comes from one of the big names or one no one’s ever heard of. What they really want is what they’ve always wanted: reliable service at a reasonable price and with decent customer service.