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How will MVNOs fare this holiday season?

Not every MVNO can be like Blyk. Notably in the U.S., MVNOs haven’t proven the most reliable business model. However, with the economy on the downturn, many people are looking to prepaid wireless to reduce overall phone bills. Does this mean that MVNOs will see more business, especially as we head into the holiday season? Probably. But it’s not all good news, according to analyst Tole Hart.

“The silver lining is that they are prepaid so people may look to use these services as they budget more, but ARPU should be impacted due to more spending restrictions,” Hart said.

So while sheer subscriber numbers might go up, the profit margin the MVNO makes off each customer could drop. This represents an opportunity for MVNOs, really, to provide excellent service to its customers. Once the economy picks up and they can budget more money for their wireless services, perhaps they won’t want to switch from their prepaid phone provider.

Hart advises MVNOs to stick to their roots in times like these, rather than offering multimedia-intensive services in order to mimic larger carriers. People who are in the market for that will more likely turn to a larger carrier, anyway. By focusing on the basics, MVNOs can fulfill a consumer need.

One Response

  1. Perkins Says

    I have mixed feelings on this. On the one hand, yes, the smaller MVNOs are probably going to take strain in trying to keep up with what the large carriers can offer and there will always be those that would rather stick with the big carriers. The problem though with not offering the extra, is that eventually they will loose many clients, as data and multimedia is the way consumer needs are going, so by not having these services, there’s not much of a need being fulfilled.
    From my experience with Net10 though, they seem to be keeping up perfectly…their latest offering of unlimited talk, text, picture messaging and web for $50, is at a lower rate than anything of it’s type in postpaid. Yes, their profit margin is probably lower, but they stand a far better chance of attracting and keeping new customers.

    Posted on December 7th, 2010 at 9:41 am

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