MVNOs fight for market share in the US

Whereas in Europe the market for Mobile Virtual Network Operators (MVNO) is currently being extended by operators providing premium services tailored to special target groups, there is – according to a recent study by the Strategy Analytics market research institute – a first consolidation already taking place on the US market. MVNOs such as Helio or Mobile ESPN, which over the last two years tried to gain attention by carrying out large-scale advertising campaigns, were not able to win enough customers in order to prevail over their competitors. According to Sara Harris, author of the study, this was mainly due to an insufficient target group adaptation.

Many MVNOs entering the market try to lure customers with state-of-the-art high-tech products. These service providers, however, were hardly perceived by potential customers according to statistical data relating to the US market at the end of 2005, whereas providers such as Tracfone, Virgine Mobile and Boost Mobile together held 65 percent of the market. The latter MVNOs concentrate on the target group of young persons offering exclusively prepaid services. Helio or Mobile ESPN, however, were not able to gain a foothold on this market segment for three reasons: the mobile phones offered did not appeal to young people optically, the big demand for prepaid services had not been met and their products had not been marketed sufficiently to this specific target group.

In Germany companies such as Aldi or Tchibo which started co-operations with mobile phone manufacturers were able to set themselves up successfully on the mobile phone market. In 2004 Tchibo started a joint venture with O2 and currently counts more than 600.000 mobile phone customers. Here again a specific target group – that of Tchibo clients – was concentrated upon, as was confirmed to the pressetext news agency by a Tchibo company spokesman. At the beginning Tchibo´s mobile phones commercialization strategy focused on prepaid services in order to please persons who appreciate the control of their calling costs. In the meantime the product range has been extended. A competitive edge proved the introduction of a uniform system of calling rates which ensure identical calling fees at any one time.

By offering cost-efficient mobile phones, providing a clear price system and appealing services the demands by the target group were adequately met, as is reported by the company. According to the company, mobile phone customers are not that keen on being provided sophisticated special technical features or Internet access. What they appreciate, on the contrary, is to be given advice in one of the many Tchibo branches, which is another service offered by Tchibo and welcomed by the customers.

M`BlogDocument on the subject of MVNO and SMEs:

The “M`BlogDocument 0609 – The Mobile Virtual Network Operator (MVNO) as business model for small and medium-sized entities” describes potential services, problem areas and possible solutions by MVNO companies to be. The brochure contains 16 pages and is available for free-of-charge-download (approx. 1.8 Mbyte). GERMAN