Blog Post

Rocky Times For MVNOs?

Things are getting a bit dicey in the MVNO Land. Helio is costing Earthlink some profits. Amp’d is d’amp’d. And now reports are trickling in about Mobile ESPN having some difficulties in that attracting sports fans to their service. Walt Disney & Company owned service will have 30,000 users by end of 2006, lagging the 240,000-user target for the current year, a report from Merrill Lynch says.

Merrill Lynch analyst Jessica Reif Cohen says it will cost the company as much as $135 million, and they should shut it down. (I wonder if she has taken into account the airtime being devoted to the service on ESPN, instead of taking paid ads. )

Rafat thinks they should tweak the model, but not shut it down this early in the game. I think getting cooler phones should be a start. I had stopped by at Best Buy to check out the service, but there was not a single handset that would make me sign up for the service.

5 Responses to “Rocky Times For MVNOs?”

  1. Jesse Kopelman

    I think you are dead on with the handsets, Om. The real sell for mobile data is interactivity, not just viewing videos on a tiny screen. Data-centric MVNO badly need to “think outside the phone.” The funny thing is that Nokia seems to understand this the best and yet no MVNO are using their devices.

    There is also the seperate issue of an MVNO owning some of their own network infrastructure. For all the hundreds of millions they are going to spend on marketing, they might consider spending a few tens of millions on an MSC of their own so that they can do things in ways that are completely unique from the network partner and cut their own deals in terms of off network calls.

  2. No surprise that the MVNO isn’t working. First off, it is the UNE-P play all over again. So unless you use creativity like Cbeyond and mix-and-match cellular – wireline lines, how do you stand out? Handsets. Okay. But with 2 year contracts required from the cell owners, there may not be enough free agent customers left. Even LD companies like PNG and Primus are struggling to sell MVNO units. Why not add some features like VoIP? VM3EM. Privacy. Handset adapters like Moto for use on the business phone system. The reason UNE-P sold was it was cheaper – name a creative CLEC????
    MVNO isn’t cheaper, so it requires more than just marketing. To quote Tom Peters, re-invention!

  3. I’m not surprised Om… Early this year I wrote “MNVOs and The Demographic Problem”… “Entering this highly competitive landscape is a long-term investment effort that requires deep pockets to stick around, to survive.”

    Starting and running an MNVO is a long-term endeavor… and, in addition, they must do a good job targeting “multiple” demographics.


  4. Charlie Sierra

    A couple of points:

    1) even though ESPN is giving its Mobile service plenty of TV ads, the fact remains that the viewership of ESPN is pretty small. IIRC, FNC and MTV outdraw it almost everyday.

    2) Given Jessica’s report, what does this say about Gary Forsee as a leader?

    Prior to the Sextel merger, both Sprint and Nextel individually booked 500K post-paid netadds, for a combined total of 1m/qtr. Nowadays the merged enterprise books 500k/qtr.


    So less than a year after the merger, half the growth value is gone and Sextel is supposed to be a growth play. hmmm.

    This new spectrum auction should allow a “JetBlue” player to emerge and the cause all sorts of hell for the old cost heavy incumbents.

    Buckle-up boys and girls.