By Guest Blogger: Matt Maier of Business 2.0
Turns out, virtual networks aren’t such a bad idea after all. While analysts have been bashing mobile virtual networks (MVNOs) for years – thanks to several disastrous efforts in Europe – they’re all the rage in the US right now.
Blame it on Virgin Mobile. Say what you will about Sir Richard Branson, he can market the hell out of a product – even the ephemeral cell phone minute. He convinced Sprint to rent out their network (which is great for the folks back in Overland Park), which freed Virgin to focus solely on creating a service aimed at the youth market. He scored a partnership with MTV, which pretty much sets all teen trends and even poached a few former MTV employees to run Virgin Mobile’s marketing department. He also set up the service as pre-pay only, so commitment-phobic kids don’t have to sign up for contracts. (The ads are all over MTV featuring taglines like “Cut the Chord”…a reference to dumping unwieldy cell phone contracts.) The combination of these factors, has made Virgin a smashing success. In less than two years, it’s landed 1.75 million subscribers, making it probably the fastest growing carrier the US has seen.
Now, others are jumping on the bandwagon. Qwest launched its own MVNO last week, renting spectrum from Sprint. And facing the imminent loss of AT&T Wireless, AT&T is already talking about reviving the AT&T wireless brand so it can bundle services. Even consumer brands like Disney are interested in branding their own wireless services. Imagine a sports-focused, ESPN-branded MVNO aimed at the legions of sports junkies out there. It’s hard to believe it wouldn’t do well. Suddenly, MVNO’s aren’t the dogs they were made out to be.