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Thread: Sprint wants to bring back the MVNO by keeping it simple

  1. #1
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    Sprint wants to bring back the MVNO by keeping it simple

    July 24, 2012 | By Phil Goldstein


    Sprint Nextel (NYSE:S) has rapidly become the best friend of a new breed of MVNOs--from Republic Wireless to Ting, Voyager Mobile, TruConnect and FreedomPop. Granted, the number of customers that these MVNOs have is negligible in relation to the total number of U.S. mobile subscribers, but Sprint has developed a reputation as a solid partner for fledging and niche MVNOs to work with.

    Now Sprint wants to significantly expand that reach. The carrier last week said it will allow any company to become an MVNO on its network (including its nascent LTE network). Unlike the MVNO heyday of the mid-2000s, I think this just might work, if Sprint can sign up a few marquee brands to become MVNOs.

    The catch behind Sprint's new MVNO program, called Single Source Enablement, is that Sprint is promising to do almost everything for an MVNO besides go out and get customers. Sprint says its new turnkey program can include "all systems, processes, customer care, online Web enablement, and the warehousing and distribution of devices." Customer acquisition costs and other marketing seem to be all that's left.

    And that's what makes Sprint's effort so promising. When Mobile ESPN flopped in 2006, many were quick to point out its failings: limited phone selection, expensive plans and not enough of a draw to justify the cost. But with Sprint handling all of the logistics, including device distribution, a huge chunk of the cost equation has been solved for would-be MVNOs, allowing them to focus on selling content and their brands via a wireless offering.

    Matt Carter, president of Sprint's global wholesale and emerging solutions business, explained that there are many brands that want to add a wireless component--and another way to reach their customers--but don't want to deal with the complexity of running a wireless business. The question is, which companies are going to bite?

    Analysts I spoke with, as well as Carter, agree that affinity groups are the most likely option. These include fans of a particular music star like Jay-Z, but also, and more likely, fans of a sports team. Imagine a Oklahoma City Thunder or Los Angeles Kings wireless service, complete with exclusive team content and videos. It would be akin to Mobile ESPN, except the teams wouldn't have to worry about customer care or device warehousing.

    "The scale that they [Sprint] have now, by being able to open it up and take care of [the complexity] for you, makes it so much broader," said Current Analysis analyst Wes Henderek. "There were so many barriers to entry before and they've taken those down."

    Why is Sprint doing this? Carter said it's a part of Sprint's corporate philosophy of openness, but it's also that Sprint is the No. 3 carrier and is looking to grow its business and subscriber base any way it can. "We recognize that not everyone is going to come to our brand," Carter said. "We want to enable those other brands that bring a unique value proposition to customers and enable to them to allow their customers to experience their brand in the mobile world."

    Recon Analytics analyst (and FierceWireless columnist) Roger Entner noted that Sprint was an MVNO pioneer in the earlier gold rush, and now is looking to grab new customers by lowering costs, which he applauded. "They're willing to be more accommodating," he said.

    There are some big unanswered questions. One is just how small Sprint's operation will go. Carter did not give a precise size, but said Sprint is looking to support a wide range of companies. "Certainly there is a threshold of subscribers that you have to get to break even," he said. "It's designed in a manner to really represent the wide range of opportunities. We're not relying on huge volume brands or small volume brands."

    The other looming question is whether Sprint can get some big names to sign up for this new level of MVNO service. If a big brand goes with Sprint, others are likely to follow--and Sprint may yet usher in a new golden age of the MVNO. --Phil




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  2. #2
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    It's a cool article and it's good to hear Sprint will be giving out the LTE for the prepaid market unlike ATT and VZW so far. The only thing odd about the article is the fact it seems to think MVNOs are in some dark corner. Tracfone and all its other names are ever increasing and seem to be doing quite well - so I don't get that.

    Otherwise though, good article and good news. More competition is good for us.

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    My take is that the author is using MVNO in terms of a company targeting a specific audience. He uses Mobile ESPN as an example for sports nuts that want a phone providing exclusive sports info and apps. I just don't see this taking off nowadays. With the proliferation of Apps, any modern smartphone can gain access to the type of specific info that one of these targeted MVNO's want to provide. In the heyday of these specific phone companies, you couldn't easily install the app to provide the info, so you had to buy into the network.

    I frankly don't see it taking off. I really don't want to see a Kardashian phone service where you get their exclusive Thought of the Day. Come to think of it, those updates would be few and far between!

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    It's good to see some different options in the MVNO market though.

    Republic Wireless, Ting, TruConnect and FreedomPop are doing pretty cool things with their pricing.

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    IMO, the problem with Sprint MVNO's is the restrictions usually placed on handset activation. It's usually limited to a specific group of handsets the MVNO offers. If Sprint would open activation to any Sprint branded handset (even smartphones), MVNO customers would enjoy a wide range of handsets at any price-point available on ebay and craigs list. (Like Page Plus customers have on the Verizon network.)

    In fact, Sprint handset usually have a poor resale value because they can only be used on Sprint postpaid. Sprint postpaid users are not going to buy used handsets when they can get a new smartphone for $50 or less...
    iPhone 4S-32: Sprint SERO............Palm Pixi Plus: Page Plus ..............HP Pre3: AT&T GoPhone
    talk smart WB2YGF

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    Quote Originally Posted by johncase3 View Post
    IMO, the problem with Sprint MVNO's is the restrictions usually placed on handset activation. It's usually limited to a specific group of handsets the MVNO offers. If Sprint would open activation to any Sprint branded handset (even smartphones), MVNO customers would enjoy a wide range of handsets at any price-point available on ebay and craigs list. (Like Page Plus customers have on the Verizon network.)

    In fact, Sprint handset usually have a poor resale value because they can only be used on Sprint postpaid. Sprint postpaid users are not going to buy used handsets when they can get a new smartphone for $50 or less...
    This article shows a step in the right direction for that. It does say that Sprint will warehouse and distribute the phones and mentions LTE so they'd have to offer most of their line-up I'd say for this to happen.

    It is terrible though the fact is you can't switch a device between Sprint and Verizon despite the same frequency support and technology. Sad.

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