A new study by Global Advertising Strategies shows that MVNOs will need to strengthen relationships with their wireless carriers, and aggressively market themselves, over the next 18 months so they can thrive.
Global, a marketing and consulting firm in New York, defines the MVNO groups as low-cost, international long-distance providers targeting young and low-credit customers.
According to Global, MVNOs including 9278 Mobile, TracFone, Virgin Mobile, 7-Eleven's SpeakOut Wireless and others all have used different strategies to successfully reach their various markets. However, the first-mover advantage may be gone.
"In the past, MVNOs have had the edge in going after niche markets such as youth and international long-distance callers, but executing on this opportunity now is like hitting a moving target," explains Max Smetannikov, vice president of business development and analysis at Global Advertising Strategies. "The number of MVNOs competing for these same niches is growing while the carriers backing them up are decreasing through consolidation."
Global’s study shows that, over the next six months, MVNOs need to formulate long-term ambitions for transitioning to facilities-based operations, and to decide whether to concentrate on customer acquisition.
On the other hand, the company points out, wireless carriers must decide whether to attract more MVNOs to their networks or to compete against them in niche market segments. Global says it is critical to make the decisions now, since MVNO-carrier partnerships will be "locked-up" in the next 18 months.
"There is still time for new market entrants, but it will be much more difficult a year from now because most MVNO niches will be well-established," says Smetannikov. "Carrier consolidation has reduced the ability of MVNOs to negotiate favorable rates and services, and MVNO brands themselves will likely be subject to [merger and acquisition] speculation."
