Customer Churn = MVNO Butter
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