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Cool.Prepaid or Uncool.UnPaid

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MVNOs are the new Macarena – before you learnt the steps, the damn thing was over. Especially, when you look at new comer, cool.Prepaid, a mobile virtual service that wanted to marry high-end Motorola phones like the RAZR with low-end monthly plans. That’s a match made in fiscal hell, but nevertheless these are the new go-go years so everything gets a chance under the sun.

Anyway the deal was only Motorola handsets would be given out with this service. Now Phonescoop is reporting that Motorola has backed out of the deal and has terminated its relationship with cool.Prepaid.

In addition to its handset troubles, Cool has not yet been able to deliver its SIM-only service, either at Sears or from its online store. Phone Scoop contacted Cool.Prepaid, but a spokesman was unable to share the MVNO’s current status or future plans.

Oh oh…. or as they say, uncool.unpaid. By the way, people you got to believe me that this MVNO madness is going to end very very badly. This is just the start!

14 Responses to “Cool.Prepaid or Uncool.UnPaid”

  1. An MVNO sub is worth ~$300-500, and postpay ~$2000-3000.

    Charlie, where’d you get these figures? Especially for the MVNO value, where did you get the comps from?

  2. Charlie Sierra


    Boost is wholy owned by Sprint-Nextel, just another brand like Saturn is to GM.

    You’re under the allusion that these MVNOs are real/honest business’, and I’m here to tell that they’re a trojan horse. I’m been involved with MVNOs since 1999, and I can you for a fact the big boys are using these guys to acquire more power for themselves, and then they’ll lower the boom.

    Nobody plays “four-corners” like the telcos.
    (Hey, its still March Madness)

  3. Charlie said: BoostMobile is not an MVNO.

    How not? They don’t own towers. They don’t own MSCs. They’re an overlay to another carrier. But that’s just a comment on that point.

    Like getting bought out is of much use. An MVNO sub is worth ~$300-500, and postpay ~$2000-3000

    But if a company wants to build a model to get that $300-500, it’s wrong? Postpaid is one model. Prepaid is another. I’d argue that converged will be the sweet spot of both, once everyone settles on at least a few points there.

    Even Yahoo admits they have no idea how to monetize Flickr. At least an MVNO has a model to capture some money.

    I don’t get the customer downside. Customers have choices. They can vote the old fashioned way, or they can stick with the major telcos. I, for one, would love to have the option of picking a featureset over a carrier. Number portability? Who cares? I want full on 3G SERVICE portability.

    Erik Says: It takes 100’s of millions of capital to get an MVNO going. The (limited commercial) value in mashups is that they allow experimentation on the cheap with little capital risk.

    If you’re a VC, this is a bad thing. If you’re an entrepreneur, you’re already predisposed to the idea that starting something new is a risk. I wholly concur that all the weaker web 2.0 players will be weeded out. There also used to be more American car companies. There also used to be lots of little wireless carriers. Ebb and flow. It’s a sine wave.

    What I like about the MVNO space is that it’s a set of features and proposed market targeting in search of technology, and NOT a set of technologies looking to build a market. It’s a great space to be a service provider. Does your company do a small-format IPTV? Great! Get on the Helio deck. Does your company offer data center management? Swell! These MVNOs are hands-off the hardware for the most part.

    I think it’s a reasonable space to watch as a consumer.

    I think it’s a scary space for investors.

    I think it’s a worrysome space for big telcos in the short term, and it’s an R&D model similar to Google/Yahoo in the longer term.

    When you are saying there’s a madness that will end badly, badly for who?

  4. Erik Schwartz

    So, let’s stay with the mashups for telcoms concept. Why NOT have lots of silly MVNOs? There are a dozen AJAXY desktops. There are more photo sites than photos. I couldn’t be more tagged and socially linked.

    Feel like placing any bets about how many of these AJAX desktops, photo sites and tagging sites will still exist in 24 months?

    It takes 100’s of millions of capital to get an MVNO going. The (limited commercial) value in mashups is that they allow experimentation on the cheap with little capital risk.

  5. Charlie Sierra

    BoostMobile is not an MVNO.

    MVNO’s exist because the real operators are over-capitalized, and thus need to conserve capital for the time being.

    Secondly they serve the useful purpose of providing the allusion of competition to that all mighty audience known as Congress.

    Here’s the game, buy lots of time, get new telecom acts passed that give the incumbents ever more power, and above all else make it IMPOSSIBLE for a new real network to enter the market. Greenfield builds are cheaper than ever due to massive equipment deflation.

    Also, @Home subscribers were not bought out.

    Like getting bought out is of much use. An MVNO sub is worth ~$300-500, and postpay ~$2000-3000 .

    Watch what the new ATT Wireless is working towards. Hint, its very similar to what Nextel was thinking about before the Sprint merger. Codename: Backdoor.

    PS. There is massive customer downside here.

  6. Jesse Kopelman

    I’m with Chris here. Who’s going to lose other than stupid VCs (who would waste their money on something, no matter what)? The good MVNOs will either succeed or be bought out or both (see Boost mobile), if Charlie is right the network owners will learn something, and customers get more choice. Win-Win-Win, seems to me.

  7. So, let’s stay with the mashups for telcoms concept. Why NOT have lots of silly MVNOs? There are a dozen AJAXY desktops. There are more photo sites than photos. I couldn’t be more tagged and socially linked. Same deal. MVNOs all think they have a demographic:

    Amp’d- rich kids.
    Helio- their parents.
    Boost- hiphop and the prepaid set
    Virgin- metrosexuals
    ESPN- sports, baby!
    Disney- kids, young and old.

    There are even more MVNOs planned that are really no different than custom faceplates with featuresets. Because the mindset is: hit the markets one owns, there are all kinds of marketers eager to be a fake telco.

    Indonesia has TONS of prepaid companies. At the end of the day, they’re mostly MVNOs. They split theirs up by micro political sects, micro religious sects. The distribution is long tail like you wouldn’t believe.

    In the US, I am imagining a glut of around 2 dozen spread out over the next 24 months. Thereafter, as Charlie points out, RBOCs and the big guys will learn the best practices and swallow a few up.

    Who cares? That’s what Web 2.0 companies often do. Google and Yahoo buy them or built their own.

    There’s no real downside. Consumers can choose to stay or go. Telcos like Verizon and AT&T get some extra revenue by being the “vending machine” for all the MVNO dreams.

    If there’s gold to mine, the BEST job is selling picks and shovels.

    -Chris of []

  8. Charlie Sierra

    MetroPCS is in Atlanta, and their subs love it. They tried an IPO last year but I don’t think they were ready for that kinda ordeal, and instead bought more spectrum.

    The service works very well.
    Typical numbers:
    usage ~1700 (vs. 900 for VZW)
    direct cost <1cent/min
    ARPU $40

    So they can last. Should merge with Leap eventually. But I do know they’re looking for more cheap spectrum.

  9. Thats too bad. When you first blogged about them I liked the idea because of the availability of the slivr and Razr. However if they won’t have “cool” phones then you can forget about them. Meanwhile the rest of us are still waiting for an Apple branded iPhone.

    P.S. Om have you heard of MetroPCS? What do you think of their service giving its flat fee pricing structure and unlimited minutes?

  10. Charlie Sierra

    “this MVNO madness is going to end very very badly”

    Yeah baby.

    Thats as is it was always planned.

    Failed MVNOs will allow the embedded incumbents to proclaim their own prowlness because, hey just look at how the others (ie. MVNOs) failed.

    Chris, MVNOs are just the industry’s way of letting others pay for all the experimentation and set of future customer expectations. Once an RBOC consensus forms, its lights out MVNO.
    Never forget @Home. OPM baby.

    PS. In the short term, it really, really, really matters who the MVNOs signup as their subcontractors.

  11. okay, chris, i agree with the premise you come from makes sense. however the me-too mvno doesn’t make too much sense. also it is very expensive to have one going. how many are needed? what demographic can support the mvno? how does helio stack up against a no-name like cool.prepaid.

    those are the issues. of course it reminds me less of resellers, and more of dsl resellers, who were ultimately undone by the bigcos. just saying not all mvnos are equal.

  12. But Om, MVNOs are just the mashups for telecoms. In the old days, we called them resellers (AirTouch, Virgin Mobile, Boost Mobile). The reason the MVNO mindset kicked in was that in the old days, resellers had to be married to one single carrier’s offerings. If you ran on Verizon’s lines, you had their offerings. Period.

    Amp’d, for instance, has a collection of services from all kinds of niche providers, and they have Verizon, and they have a big partnership with bcgi, a wireless services company. The aggregation of various services into a single branded offering has a certain appeal, especially when you re-spin your POV from “tiny companies hungry for venture funds” into “independent entrepreneurs looking to break up the status quo in wireless.”

    I’m insanely biased on this issue (9 years wireless experience, 16 total in telecom), but I think you should consider this from the angle of giving people a mash-up of telecommunications offerings that differs from the mainstream wireless carriers.