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Summary:

Say hello to yet another MVNO. Andy takes the covers off XeroMobile, a Los Angeles based MVNO, which he says has raised $300 million in European money. No details on who the investors are, and what is the game plan, but like two other Southern California […]

Say hello to yet another MVNO. Andy takes the covers off XeroMobile, a Los Angeles based MVNO, which he says has raised $300 million in European money. No details on who the investors are, and what is the game plan, but like two other Southern California companies – Helio and Amp’D – it has attracted major dollars. Earlier this month, sports junkies focused ESPN Mobile launched at the Superbowl.


Many of the newer entrants seem to be skating on thin ice. Despite some over optimistic surveys and general enthusiasm (more than three dozen different MVNO operators already) the biggest (and only notable and notable success thus far) have been two: Virgin Mobile and Boost Mobile. A few of the low-price resellers aka MVNOs are doing well but purely on price.

I like to think of MVNO as the new CLECs (competitive local exchange carriers) that were going to eat Bells’ lunch. What they did instead, ate up lot of investor dollars. Why? because CLECs depended a lot on the Bell pipes. MVNO’s are no different – they depend on the generosity of wireless carriers. Of course, carriers would be happy to help, if you give them a piece of the action as both Boost and Virgin did.

Anyway as 3GSM gets underway in Barcelona, expect more MVNO buzz.
Previously:
MVNO Train Wreck is Coming
Damp’D and Troubles Awaiting MVNOs

  1. What about AMP’d mobile?

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  2. With the surge in the MVNO business, who ultimately benefits? The wireless tower companies (American Tower, Crown Castle), handset manufacturers (Motorola, Nokia), wireless carriers (Verizon, Cingular) or the consumer themselves due to lower prices? Any thoughts/comments?

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  3. I don’t disagree that the new group of MVNOs pose a tough bet. That said, I do think that the complexions and drivers for CLECs were a lot different than MVNOs.

    Many CLECs filed for their status because they wanted more favorable pricing on transport, so they could get more margin for their ISP businesses. Others focused on delivering telephony services to business, to fill in the gaps where Bell left off. In any case, CLECs were born into this genre, whereas MVNOs are pushing into it.

    MVNOs are driven by niche opportunities and/or brand differentiation, and less by getting cheaper costs on existing business. The brand guys are playing up brands that have already tapped the masses. Their ultimate challenge will be mapping reasonable and interesting services to their already working brand….otherwise known as execution. The newcomers will probably do a better job productizing, but will struggle getting to critical mass.

    So FWIW, the outcome may end up being the same with MVNOs as was with CLECs, but for very different reasons and drivers.

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  4. What about ethnic or cultural MVNOs? It could be a different market with services targetting different groups.

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  5. Jesse Kopelman Monday, February 13, 2006

    Biren, it’s not going to be tower companies. Even if MVNOs drive network usage high enough to necesitate the construction of new “capacity” sites, those sites will generally be on existing buildings, not new towers. Everyone else on the list should benefit. Also add in network equipment makers (usually the same guys who make the handsets). A final note is that MVNOs won’t drive down prices (it’s hard for them to undercut the people they are buying the airtime from), but they will accelerate the introduction of new and different services and rate plans which is also good for customers.

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  6. In the short-term it is the consumer who greatly benefits from the choice to choose their own niche mobile provider at a reasonable price. It also helps to cement the network coverage grip that the largest telecom companies (Verizon, Cingular, Sprint) have on wireless spectrum. The benefits of additional capital to expand uncovered areas also exist, but historically the funding doesn’t always flow where it should.

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  7. It is obvious what’s going to happen. A few MVNOs will survive. Most will eventually be acquired back by the major carriers – at a much reduced rate. MVNOs = eventual lower cost of acquisition for the major carriers.

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  8. I think MVNOs are just a way for carriers to try different business models with someone else’s VC money.

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  9. Xeromobile are run by the same people who ran Gizmondo. Nice background in fraud

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  10. WOW Xero Mobile’s plans to revolutionize the cellular industry is an excellent way to unleash this company’s true feelings about the money-saavy college student. I heard that they will offer some of the most affordable pricing ever along with top notch phones at wholesale market pricing. Has ANY company done this before? I seriously doubt it. Despite all the negative issue behind the company, this will proove to the community how much the average person shall be valued over the “corporate.” Many other cellular companies proffit majorly off of sales of phones and service. This company will not.

    The suprising efforts that XERO MOBILE will make are tremendous. The overall savings will be around 40% from what everyone pays now. That is simply amazing. When a company cares about its own pricing rather than profits, what can go wrong?

    When this service launches, im sure it will do great. As a cellular phone company, i believe they will offer some of the best service FREE or low cost…Making it a COLLEGE Students dream to sign up. ESPECIALLY WITH NO CONTRACT!!!!

    This Service will be simply amazing. I am a college student from UCLA so i know it will bennefit me on my behalf as it will to any other college around the nation.

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  11. I read alot about this company and I don’t understad what the big deal is. College student like myself would love to save so much money. Im sure many educated people reading this website have attended college at some point in their life. They know exactly what I mean. If I had the opportunity to cut my spending, I would. On top of that, the benefits are amazing. No contracts, cheap minutes, top of the line cell phone. What else would a poor college student want?

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  12. I heard Xero is going to license their concept to other MVNO’s around the world. If they succeed this could become one of the most important MVNO plays in the market today. Question is, will they have the resources to execute the plan? Is the management up to it. Not a lot of telecom background as far as I can see… I hope its not a hype. I’d like to see the table’s turn on the carriers of today.

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  13. Taylor Wills Sunday, April 16, 2006

    I ran across this site and had to say something about this company. It seems like there team has the right idea despite their past. Targeting teens/college students is a huge rewardable market. On top of that, they offer amazing plans which students of any college would die for. It’s one step toward a customized advertising scheme. I would want a phone that tells me all the latest information. Top of the line phones with mp3 cabability is like a dream. I see this company as another “IPOD” revolution for students.

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  14. Cassie Reynolds Tuesday, April 18, 2006

    Hey all,

    I heard about the company through a friend and would love too see them make it. An affordable cell phone with high tech features is what I really want. It’s something most students will carry on them 24/7. With no contracts, it’s amazing what they can do. I know of other companies that charge up to $200 for a brand new phone, on top of that a 1-2 year contract. Supposedly this contract is supposed to knock down the price of the phone, but still $200 is a lot for a college student. Most of my friends have cell phones that cost less then $60. They are afraid to get anything more expensive because they feel they are going to change their contract anyways. Without a contract and a good phone, I think the company will boom with the college campus scene.

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  15. Xero Mobile might be a dream for collage kids, but it will be a nightmare for anyone dumb enough to invest. The Gizmondo cost investors about 50,000 dollars a unit when it only sold for hundreds. The people that ran Gizmondo bathed themselves in an orgy of investor money. One of the top Gizmondo guys is sitting in jail right now facing 14 years in prison. One of the minor charges he faces is possession of cocaine. At least now we know he was stoned. If you are thinking of investing in Xero, run now and don’t look back! If you are a collage kid, line up, these guys hand out money! The company’s business plan is a crack pipe dream, do the math. Do the research on Gizmondo. These are the same people that ran Gizmondo and the same business plan as Gizmondo.

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  16. The idea behind Xero Mobile is something i’ve been waiting for. I know i will be able to save lots of money because i use my cell a lot. I think receiving the interactive media messages will be quite cool…i would have fun viewing clips on my cell phone! especially if im saving some MULAH!

    No matter who runs the company, i am for this new idea…in the end…i think it will do just fine!

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  17. You should do your research, as it does matter who runs the company. Not only were the investors out at Gizmondo, so were the consumers. People bought equipment with the promise of software that never materialized. Although Freer and Ericsson are not officially running the company, they show up at the Xero office on the days they are not in jail. Are you people getting paid to write nice stuff about Xero?

    http://www.nbc4.tv/news/9042444/detail.html

    http://cbs2.com/topstories/localstory117003409.html

    http://www.latimes.com/news/printedition/c…s-pe-california

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  18. It’s been reported that all of the Xero Mobile employees have fled the office. The landlord came in on Friday to find them packing. They left no forwarding address. Gone public on Monday and ran out on Friday. Is this a record? This is a better story than Gizmondo, oh wait, this IS the Gizmondo story. I guess we won’t see many “students” posting how great Xero is after they have done their “research”. Any one at Desi TV left in the building? HA ha ha ha ha. LMFAO!

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  19. Stefan, once again you have posted something completely inaccurate…basically like all your posts on every blog. Get your facts straight. The company moved offices and is very alive and well. We’ll get back in touch by years end, and you will look awful foolish as you have no hard evidence or knowledge to back up anything you say.

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  20. Carl, let’s wait and see. I’ll bet by the end of the year, Xero will be bankrupt; the employees will have worked for no pay; equipment and service providers will not have been paid and the investors will be out their money. Unlock codes will be published for the free phones and they will sell like Xboxes on eBay, provided any collage kids get them in the first place. The only twist you don’t expect is that you, Eriksson and Uf will still be in jail for errors on your visa applications. As the Jedi Mind Trick fails you in America, and people check everything you say, you will have difficulties selling cold bottled water in the middle of Death Valley on a hot day. “If that guy only drove a Corvette…” Why don’t we put up a gentleman’s wager for something worthless? I’ll put up my Gizmondo stock, why don’t you put up some of your Xero stock.

    As for my error in previous posts, I stand corrected. You guys moved out of Gizmondo’s old offices as Gizmondo wasn’t there to pay the rent. Xero moved to the “east side” of West L.A. where they can break in a new landlord.

    You made some errors too. Remember when you said 500,000 had inquired about the Gizmondo when the correct number was about 50? If we assume that you maintain the same rate of exaggeration, then Xero might get a few thousand customers!

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  21. [...] package in the USA which hadn’t even launched at the time. I have been hearing fishy stories regarding Zero ever since and decided to have a look [...]

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