Tuesday, September 26, 2006

“The world is not being fair right now to MVNOs.”

At today's MVNO Strategies and Markets Conference, Dave Johnson of Sprint's Private Label Services group--speaker of the above quotation--asserted, despite what you may have read in the newspaper, that opportunities still exist for MVNOs.

Sprint has analyzed their numbers being ported out (i.e., being switched to other operators) compared to their MVNOs' port-ins, and is seeing very little cannibalization of its customers from its MVNOs. Therefore, the MVNO market is more attractive for Sprint than people might assume.

Johnson outlined six key capabilities that MVNOs need to be successful:

  1. Ability to attract switchers – 90% of new prospects will be switchers – and switchers often want something different from their prior provider (i.e., don't want to trade one basic offer for another basic offer)

  2. MVNOs must focus on underserved segments. Johnson implied that MVNOs would not be approved by Sprint if they can't clearly identify a compelling target segment. He displayed data showing that although overall wireless penetration is high (73%), many segments have lots of room for growth (examples shown – children, elderly, low-income)

  3. Strong distribution. This we've heard often before (and reiterated several times by speakers today), but, according to Johnson, distribution is the #1 predictor for success of Sprint's MVNOs

  4. Strong brand and differentiated marketing

  5. Exclusive, relevant or compelling data content

  6. Strong financial backing and understanding of wireless financial and user metrics. $5M investment is not enough to sustain. A typical MVNO will be cash flow negative for 3 years

He also cited some example MVNOs (disclaimer – they are all Sprint MVNOs). Movida – strong segment focus on Hispanic market, including in-language content and support. Virgin – superior distribution - 25,000 retailers. Helio – strong financial backing. ESPN – compelling content. Disney – strong brand.

He also highlighted kajeet, a tween MVNO in the implementation stage, for having strong financial backing and admirable patience. They are trying to “do it right” and are “not in a hurry”--a rarity in an industry where people feel they must launch day after tomorrow.

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