MVNO. Those four letters will enter into the mainstream technocabulary this year as more service providers push into the mobile wireless space. For the uninitiated, MVNO stands for Mobile Virtual Network Operator. That could be anyone that doesn’t own wireless spectrum-from Disney to Virgin Mobile to Charlie’s SnackShack. In the simplest form, an MVNO buys minutes from a traditional cellular carrier and then resells those minutes as a voice service, usually targeting a special interest consumer group like Virgin Mobile’s successful youth pitch. That targeted policy was a good way to go while the market was still nascent; now that things are starting to heat up with fixed-mobile convergence (FMC)-three other initials that will gain traction this year-and cable’s joint venture with Sprint percolating, reselling voice services won’t be enough, said D.P. Venkatesh, CEO of mPortal, an enabler of mobile content and applications. Majority will fail “I think the majority of MVNOs are going to fail; not because these guys don’t have a sound business case, (but because) I think they’re totally unprepared for the fact that a Verizon Wireless or Cingular or even a Sprint could very easily offer what they do to their target market,” Venkatesh said. Venkatesh proffered an admittedly self-serving model, considering mPortal’s product line: Use content to differentiate as an MVNO. “A lot of people are underestimating the importance of data service and how important it’s going to be in determining whether an MVNO succeeds or fails,” he said. “Even on the wireline side, voice has been a commodity, so you’re forced to compete in other areas.” Cable and content One player that could and should benefit from this model is the cable industry, which, joint ventures aside, will probably use some version of MVNO while waiting for wireless spectrum to free up. “The cable guys are interesting,” Venkatesh said, listing three reasons why he believes cable operators will succeed where others fail. At the top of his list, he said, is money: Cable, as penurious an industry as there might be outside of a small market Major League Baseball team, has enough to buy its way into the MVNO game. “It does take deep pockets,” he said. “There’s a lot of investment even without a network, and you need somebody to come in like a cable operator.” The second reason cable will succeed, he said, is because MSOs understand how to run a service “as opposed to running a brand or running some other kind of product. What really pleasantly surprised me when we were talking to cable guys as opposed to a lot of the other big content players and the brand guys is that cable guys know billing, they know customer care. When they come into wireless, it’s more of an extension of their natural base as opposed to someone … that is largely a brand with no direct experience in running subscription-based services.” Wireless bundle Finally, he said, cable has a place for wireless service as part of a quad-play bundle. “Everyone (else) wants to be an extension of a Sprint or a Verizon. The cable guys are the first ones who are saying ‘I want to be a Verizon’ or ‘I’m already a Sprint.’ Whether it’s triple play or quadruple play, they want to be a true full-service provider,” he said. The drawback for cable, for now at least, is the industry doesn’t have any licensed spectrum-and unlicensed is not an area where anybody really wants to go-to control its own destiny. Cable must rely on the generosity of industry strangers like Sprint or, perhaps, take the long-suggested plunge and buy a national brand like T-Mobile or Alltel. In the end, it’s likely spectrum will be available for the taking when the broadcasters abandon analog channels in the 700 MHz range and the FCC opens the spectrum to the highest-that is, those with ready money-bidders. Until then, being an MVNO-even if it is called a joint venture-will get the ball rolling in competition with the increasing “broadband” focus of such competitors as Verizon Wireless and Cingular. Underestimating cable “The (wireless) operators are completely underestimating the threat of cable … the MVNO threat from a cable operator, which could be a pretty significant one,” Venkatesh said. “’06 is going to be a big year for the cable guys. These guys know how to run tens of millions of subscribers; they know the issues of billing and care and ops. The DNA is already there in terms of their ability to run billing and ops and everything that is needed to run a service provider.” Finally, he said, the interest is there. Jim Barthold

The Daily


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