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Coming to America: China Telecom launching U.S. service

Ryan Kim — Wed, 09 Nov 2011 18:00:00 +0000

Despite a bad record for mobile virtual network operators in the U.S., China Telecom is moving ahead with plans to pursue an MVNO service in the U.S. starting next year. In an interview with Bloomberg, Donald Tan, the president of China Telecom Americas, said the branded service will start early next year and will target tourists and travelers who fly back and forth between China and the U.S. frequently.

The service will be priced competitively and will be built off an existing network in the U.S., most likely Sprint or Verizon. China Telecom operates on CDMA, the same wireless technology used for 3G by Sprint and Verizon. Tan said China Telecom has been in trials with different partners and expects to select a wholesaler soon. Users will get one line that works in the U.S. and one line that operates in China. Tan declined to provide more details about the upcoming service.

China Telecom’s initial bid may sound modest, but it could lead to a bigger play by China’s largest fixed-line provider and its third-largest mobile carrier. Tan said if all goes well, China Telecom may consider launching its own network in the U.S. instead of renting capacity from another operator. The company has $9.6 billion in total current assets, including about $4 billion in cash.

“If the service is growing fast, maybe we can set up our own infrastructure,” Tan told Bloomberg. “The money is no big problem for us.”

A larger infrastructure play could run into opposition in Washington, which is wary of China. The U.S. government recently blocked Chinese network equipment maker Huawei from taking part in a nationwide emergency network out of national security concerns. And foreign companies need to get an FCC waiver to own U.S. spectrum.

But first China Telecom has to prove it can make its MVNO work. Disney, ESPN and others tried and ultimately gave up after receiving little interest from consumers. SK Telecom, another Asian carrier, tried with Helio and ultimately sold to Virgin Mobile, which killed off the brand after being sold to Sprint.

The market for people who need and want phones that can operate both in China and the U.S. is specific but also limited. But Japanese telecom provider DoCoMo has also launched its own MVNO service earlier this year in the United States on T-Mobile, aiming at tourists. It will be interesting to see if these new efforts can make this model work or if it will ultimately follow in the footsteps of other MVNOs that gave up.

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Truphone Goes MVNO But Still Faces an Infrastructure Challenge

Kevin C. Tofel — Wed, 20 Jan 2010 20:37:52 +0000

They say that those who fail to study history are doomed to repeat it. That’s why one part of me is wondering why Truphone today announced an Mobile Virtual Network Operator (MVNO) effort with Vodafone UK (PDF). The move dovetails with a second Truphone product, also announced today (PDF) — the Truphone Local Anywhere service. Targeted towards the international jet-setter, Local Anywhere offers significant cost savings thanks to local rates for calls made outside of one’s home country. “A single, smart SIM” provides the local numbers and rates, according to the company.

For example, a U.S. resident could call home from the UK for 12 cents per minute on the Local Anywhere service. That same call for an AT&T customer with international roaming would cost nearly 10 times that amount. I see the benefit if you live in or travel to the initially supported countries — Truphone expects to expand the service this year across Europe, in Australia, Hong Kong and South Africa. So Truphone Local Anywhere makes financial sense — just like having a local Google Voice number geographically close to those who call you the most. But what about that MVNO business? How can Truphone succeed where so many before them have failed?

Let’s face it: With the notable exception of Virgin Mobile, very few mobile operators can even say “MVNO” without grimacing in pain. Odds are that this arrangement won’t be profitable in the traditional sense. Truphone isn’t looking to buy cellular service at wholesale and directly resell it at retail to eke out a small profit. Instead of that direct sell method, it appears to be one of indirect sales, in that Truphone hopes the arrangement will increase demand for its services and thus put money in the bank.

At the end of the day, it still looks like a standard yet slightly tweaked MVNO business model — and that’s not a model filled with optimism. In the meantime, it highlights one of the biggest challenges that Truphone and other competing services have to face: lack of control. The company may have an MVNO deal with Vodafone UK, but ultimately, who’s in control of the pipe, the data in it and pricing for it? Not Truphone.

This same lack of control is evident with the company’s VoIP offerings, too. To Truphone’s credit, the company earlier this week discussed its voice services over Wi-Fi vs. those over 3G and noted this very constraint. Karl Good, Truphone’s director of applications, put it this way:

“[U]nlike some of our competitors who have made VoIP calling available over 3G, we will not be doing so until we have developed a solution that will give our users a level of call quality that we are proud of.”

Without direct ownership and a stake in the level of call quality, Truphone simply can’t control the experience. And while I have high hopes for VoIP services — I use them myself on a daily basis — the ultimate issue is that these services are simply here ahead of their time. Voice is indeed a dying business in favor of data, as the numbers clearly show. But voice as data — on your pipe or someone else’s — is currently more advanced than the infrastructure on which it must rely. We’ll have to let history be the judge, of course, but voice isn’t the business I’d want to be in these days.

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Qwest to Shut Down Wireless Service

Om Malik — Tue, 18 Aug 2009 12:49:25 +0000

Updated with correction: Qwest, the smallest of the Baby Bells, is shutting down its wireless service. It’s told its customers that they have 60 days to switch to other carriers. All Qwest Wireless services will be done by Oct. 31, 2009, the company said in a statement. (More details here.)

Over a year ago, Denver-based Qwest started re-selling Verizon Wireless service as part of its consumer offering. Prior to that, they were rebranding Sprint service as “Qwest Wireless” and as a result it’s now urging people to switch to Verizon. The two companies had signed the deal because they were going to jointly bid for government contracts.

Back in March 2008, Qwest CEO Ed Mueller told me that, “All we want to do is partner with a national wireless player where we can rebrand and remarket their service to our customer base. We are ambivalent about the technology but we want a partner with retail presence.”

Apparently the customers didn’t get the memo — only a few thousand have signed up. Like many other mobile virtual network operators (MVNO), things have not gone swimmingly for Qwest. At the end of the second quarter, Qwest had 185,000 MVNO customers.

The company had announced plans to shut down its MVNO wireless business along with its second-quarter 2009 earnings announcement. This business brought in less than $10 million in revenues during the period.

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Virgin Mobile USA: Last MVNO Hero

Om Malik — Thu, 11 Oct 2007 15:30:52 +0000

If you had to pick one mobile virtual network operator (MVNO) whose success has spawned dozens of copycats (most of them failures), then you have to go with Virgin Mobile USA. By focusing on the younger demographic, the company has snagged about 4.83 million customers.

A joint venture of Sprint (S) and Richard Branson’s Virgin Group, Warren, N.J.-based Virgin Mobile (VM) went public today. Its shares were recently changing hands for $16, up 6.7 percent. Late Wednesday, the company priced 27.5 million shares at $15 each, raising about $412.5 million, reports Reuters. The new cash will be used to pay down its debt and buy out Sprint, whose stake currently stands at 16.7 percent.

The company had revenues of $667 million for the first six months of 2007 and a net profit of $26 million. And that took six years. My advice to all MVNO wannabes: Pick another way to spend your working life. Like managing the Yankees – I hear there might be a job opening soon.

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Chips tell the story

Om Malik — Thu, 12 Aug 2004 15:35:12 +0000

Ever since Cisco and HP announced their poor results, investors have been reacting with a sense of panic, and lot of hand-wringing. It is a little late now, because they ignored the disaster signals coming from the semiconductor sector. The chip equipment makers like KLA-Tencor have been warning about slowing sales for a while. When their sales slow, it means that chip foundries are not buying, because in turn they are seeing slowdown in orders from their customers, mostly fabless chip companies. In other words, chip equipment order book acts like an early warning system for what is going to be an industry wide problem. National Semi cut its forecast yeaterday. Cisco’s rising inventories means that there will little growth in the business of companies like PMC Sierra, Broadcom and others who supply to Cisco.

This morning, Ren Zamora, analyst with Loop Capital wrote, “A stronger case is being made that year-over-year technology growth is slowing more than we originally expected. Near-term, we are less comfortable with the concept that inventory builds are growing to prepare for an increase in customer demand.” His action: cut estimates for Texas Instruments which sells a ton of chips for all things that are supposed to be much in demand: cell phones, DSL modems, VoIP gear, handhelds and other musical gear. Zamora’s actions suggest well these devices are not going to be as hot in the near term. Vishesh points to a good round up on The Washington Post, and writes, “Anyone else get the feeling that the 2003 recovery might be fading? Rember the 2001 debates about whether it would be a “V” shaped or “W” shaped recovery… i.e. would we dip again? Feels like it might be the later.”

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