Customer Churn = MVNO Butter

Brand loyalty is rare among cellular subscribers, according to a study released this morning by In-Stat -- a finding that could have profound future implications for mobile virtual network operators (MVNOs) targeting enterprise customers.

According to the new In-Stat survey, entitled "MVNOs: Current and Planned Wireless Subscriber Interest in Alternative Carriers," 80 percent of the 1,017 current cellular subscribers and people who plan to subscribe in the next year would consider switching their service to a virtual operator. Often connected with established, familiar brands targeting niche consumer markets (such as the new Mobile ESPN), MVNOs offer packaged mobile voice services along with specialized applications and features, running over conventional carriers' cellular networks.

While most of these new, non-traditional providers are focused on the consumer markets, the real opportunity could be in the enterprise.

"While 2005's MVNO activity was centered on private labels and their MVNO aspirations for various consumer segments," says Pyramid Research in one of its "Predictions for 2006" for the mobile voice and data market, "2006 will see announcements from business-oriented companies looking to become [Enterprise] MVNOs to...bring solutions to various segments of the business customer market."

Early customers for these virtual-network services, according to Pyramid analysts, will be financial institutions and IT firms.

"I know for sure that there are MVNOs, both in North America and Europe, that are either out there, or have developed business plans, to focus on the enterprise market," says Daniel Karlsson, founder and CEO of gametel, a gaming-focused MVNO based in the U.K. "Particularly those with specialized services for the corporate market, including data services."

Atlanta-based MVNO Cbeyond, for example, last week introduced BeyondMobile, a voice and data service focused exclusively on small businesses. BT has also moved into the enterprise-MVNO market with its Mobile Business service, which targets small and medium sized firms both in the U.K. and North America.

Another Pyramid forecast, from a 2005 report entitled "Next-Generation MVNOs," found that revenue from mobile enterprise customers in Europe will grow 9 percent annually over the next two to three years, compared with 4 percent for the consumer sector.

"We believe the many prepaid, consumer-oriented MVNOs of today will be joined by an emerging breed of virtual providers focused exclusively on providing a better customer experience in the business segment," wrote co-authors Nicholas McQuire, Pyramid's senior analyst for Europe, and Christian Bormann, CEO of wholesale wireless services provider Virtuser.

In-Stat found that many of the factors that would influence existing or future cell-phone subscribers to consider an MVNO -- payment-plan flexibility, service quality, price, and so on -- will apply even more strongly to the enterprise market.

"The consistent response that we find, and I think everybody finds, is that the current choices are viewed as not being amongst great companies," says Allyn Hall, In-Stat's director of wireless research. "It's mostly which one is not so bad right now."

And it's that sort of "pick-your-poison" mentality that means customers won't think twice about signing up with another service provider for even the slightest perceived advantage.

— Richard Martin, Senior Editor, Unstrung

jon_stark 12/5/2012 | 4:07:46 AM
re: Customer Churn = MVNO Butter MVNO's are certainly on my radar, and I was excited to see this article, but I'm a little concerned about the seemingly small amount of evidence supporting the growth of MVNOs (of EMVNOs), particularly in the US market.

I went to the Pyramid web site, and while they mention the conclusions that you highlighted in youur article, they do not give a clear indication of the evidence that supports this claim.

Do they have some larger body of evidence that supports their conclusions, or was this conclusion based on a million little pieces...?


data_sub 12/5/2012 | 4:07:43 AM
re: Customer Churn = MVNO Butter MVNOs in enterprise sounds a little insane. Cingular, Sprint, and Verizon already support the major enterprise and law enforcement accounts. The enterprise wants stability, credibility, and security. These are not traits of MVNOs. MVNOs lack competence, resources, network infrastructure, control of access market, and control of vendors. Even if an MVNO did come out with a cool app or some unique twist (enterprise or other), the big operators will just build right over them.

All the MVNO I have seen are prepaid voice MVNOs (except the Disney/ESPN MVNOs). There are so many of these coming out it is silly. Where is the differentiation? Is this list correct? (Note: this was put together rather quick) I don't see one of these MVNOs targeting enterprise.

- Virgin (Sprint)
- ESPN (Sprint)
- Disney (Sprint)
- TracFone (Verizon/Cingular)
- Amp'd (Verizon, Universal funded)
- Boost (Nextel/Sprint)
- Helio (SK-Earthlink)
- 7-11
- Time Warner, Comcast, Cox (bundled landline and wireless)
- Att (Sprint)
- 9278 (Sprint)
- Radio Shack (Verizon)
- Yahoo (Cingular)
- Airvoice (ATT)
- Call Plus (ATT)
- EZ Link Plus (Cingular)
- GSR Mobile (Sprint)
- Just Talk (ATT)
- Liberty Wireless (Sprint)
- Locus Mobile (ATT)
- Mobile PCS (Sprint)
- Omni Prepaid (Verizon)
- Page Plus (Verizon)
- STI Mobile (Sprint)

Besides VMU and their TTM advantage I am not impressed. ESPN and Disney have content but they also sell this content to the other big operators and they are pricey.
While the major operators are not great, how do these companies expect to be cheaper and better?

A good enterprise MVNO would sell dual mode wifi/cellular handsets that were unlocked and easily integrated with enterprise PBX (i.e. seamless roaming). I can't imagine any of the big operators endorsing Voice over WiFi with seamless handoffs. At least a MVNO could help get handset vendors to break the lock the big operators have over handset development. Maybe the MVNO could partner with Cisco, Avaya, and Nortel and sell enterprise VoIP solutions.

How about a Cisco MVNO? ...better yet why doesn't Bush launch a republican MVNO with 100% CALEA at no extra charge. Or hell, a church MVNO...time for me to go to bed.
RBMartin 12/5/2012 | 4:07:38 AM
re: Customer Churn = MVNO Butter As tempted as I am to give a Frey-like response -- "I embellished some events based on the person I wanted to be" -- I'll stick to the topic at hand and just say, it's a fair question. There are some early indications that small businesses could be a lucrative market for the non-branded (i.e. not Disney, Virgin, or ESPN) MVNOs, because of price, service, etc., but it's early days yet. I am rounding up some examples now so stay tuned; but I think you're right, it's unlikely that large enterprises will turn away from the primary carriers in significant numbers.
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