How will MVNOs fare this holiday season? posted by Joe on December 3rd, 2008 - 8:30 am | MVNO
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.