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  issue highlights May 13, 2008 | A Penton Media, Inc. Publication  
iPhone: All signs point to 3G

Podcast: Mobile TV Trends & Insights

Leap goes live in Vegas

Sprint: CDMA Direct Connect ramps up


editor's perspective

Are MVNOs banding together?

May 13, 2008, by Kevin Fitchard
The latest scuttlebutt has Virgin Mobile and Helio discussing a merger deal. The world is a dangerous place for MNVOs considering the rash of bankruptcies and closures in the last two years. Apparently the remaining ones are considering forming packs in order to survive.

Of course, none of this is confirmed. MocoNews.net first reported the possible deal last week, and the Wall Street Journal backed it up with its own unnamed sources. But Helio owner SK Telekom denied any such discussion with Virgin Mobile, though it acknowledged it was still actively seeking expansion opportunities in the U.S. Regardless of how any such deal would take shape—whether SK bought Virgin Mobile USA or Virgin bought Helio—the question is, what benefit would either company gain from such a tie-up?

Both Virgin and Helio are mobile virtual network operators on the Sprint network to be sure, but that’s where the similarities end. Virgin is a prepaid operator that focuses on the broad demographic of youth. Helio is a high-end service for the tech-savvy. You could say that both focus on the young and hip, but Virgin’s average customer scales younger than Verizon’s. Helio would only start taking interest in Virgin’s customers after they received their credit cards. The biggest difference, though, is that Virgin has gobs and gobs of customers (more than 5 million). Helio does not (less than 200,000).

So what’s the interest? Perhaps it’s aspirational: Maybe Virgin wants to expand beyond the low-dollar prepaid market into a higher-revenue set. Perhaps Virgin wants to take advantage of Helio’s fancy handset agreements to offer a better class of device to its customers as well as tap into the growing data market beyond text messaging. The problem is, I don’t see any of that technology or those services transferring. The high-end feature phones that Helio sells are beyond the price range of the typical prepaid customer, and the data subscription models don't transfer easily.

I’m not the only one that’s a bit puzzled by the idea. Says NERA Economic Consulting analyst Christian Dippon: “The synergies are pretty straight-forward: Virgin's strong brand name and excellent distribution channels will provide Helio with the much needed market boost. What Virgin gets from the deal is somewhat less clear. Naturally, it allows Virgin to expand its target market from discount subscribers to include teenage, gadget-savvy kids, yet it is unclear whether this will help Virgin Mobile to sufficiently boost its net adds, particularly in the discount segment.”

Dippon’s conclusion is that maybe Helio is selling itself for cheap, and Virgin can’t possible pass up such a deal. That would be somewhat surprising, though, considering SK just made another $270 million investment in Helio to keep it solvent. Virgin has projected slow growth for the year, so maybe it’s looking for another outlet besides prepaid to apply its brand and savvy marketing skills to. But there may be better acquisition targets for such a strategy. Besen Group founder and managing consultant Alex Besen pegs Kajeet as a much more synergistic buy.

“Kajeet targets the tween segment between the ages of 12 to 14 years old,” Besen said. “Virgin targets the youth segment from the ages of 14 to 34 years old.”

How’s that for acquisition with no overlap? Of course, maybe renaming Kajeet as Virgin Kids or Virgin Youth wouldn’t play too well, but that’s a discussion for the marketing folks.

Contact me at kfitchard@telephonyonline.com.

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telephony unfiltered blog

iPhone: All signs point to 3G

Employee emails banning vacation from June to July. Reneged Wi-Fi support. Rumors of subsidies and out of stock handsets. As we grow closer to the one-year anniversary of the launch of Apple’s iPhone, the shady dealings around the handset have grown omnipotent. Come on, there is only so much teasing we can take.
  READ MORE >>  

Wireless Round up: T-Mobile subs grow; Leap, Metro expand

T-Mobile reported 980 million new net subscribers for the 1st quarter bringing its total up to 30.8 million. T-Mobile continues to make the transition from the tiny Tier I to a large operator in its own right.
  READ MORE >>  

ADVERTISEMENT
Mergers, Migrations, and MetaSwitch: How One Communications Built its Next-Generation Network

Formed through the merger of three prominent CLECs, One Communications was tasked with integrating its formerly independent network architectures into one single voice network. With the integration came opportunity, in the form of streamlined operations. This white paper describes how One Communications was able to leverage MetaSwitch solutions to save operating costs from power, space, and maintenance and to deliver new converged services, all with negligible customer impact. Read today.

Brought to you by: MetaSwitch




telephony podcasts

Mobile TV Trends & Insights

Editor-in-Chief Carol Wilson speaks with Telephony wireless reporters for an informal roundtable discussion of the mobile TV market. Editors Kevin Fitchard and Sarah Reedy weigh in in the market's growth, competitive landscape and future potential.
  READ MORE >>  


white papers

Service Delivery Platforms: "New Services Made Easy"

Today's service providers are facing well-known challenges: ARPU erosion as voice becomes a commodity; and aggressive competitors offering a broad range of services. In response, they must deliver new high-revenue services. Unfortunately, there is a major obstacle barring their path: their traditional network integration and marketing processes mean that new service development takes a very long time and costs a huge amount. That's why the Service Delivery Platform was developed. This white paper by Daniel Marcus of MetaSwitch describes how an SDP allows service providers to define, develop and deploy new services far faster than they have been able to in the past, all while reducing the cost of service deployment. Download today.
  READ MORE >>  

Addressing Data Integration Challenges with SOA

A big challenge for telcos is validating data exchange as they integrate business applications. SOA (service-oriented architecture) offers tremendous promise to streamline application development and enable productive re-use of existing services. Learn how SOA is gaining ground. Read White Paper.
  READ MORE >>  


top news

Leap goes live in Vegas

Leap Wireless officially launched its Cricket Communications service in Las Vegas today, pitting it against fellow new entrant and regional all-you-can-eat minute plan operator MetroPCS.
  READ MORE >>  

Sprint: CDMA Direct Connect ramps up

As Sprint’s operating and customer losses continue to mount, the company revealed it plans it plans in the coming months to move its QChat CDMA push-to-talk technology from commercial trials to large-scale launch, reducing its reliance on the Nextel iDEN network for its industry leading Direct Connect service.
  READ MORE >>  

Clearwire-Sprint WiMAX deal reborn

The deal that was lost has now been found. Sprint and Clearwire have resurrected their WiMAX joint venture, this time with the added bonus of a $3.2 billion investment from Google, Intel and three cable companies.
  READ MORE >>  

MetroPCS to complete AWS shift in one year

By the time New York City goes live, MetroPCS hopes to be selling nothing but dual-band AWS-PCS handsets, allowing new customers going forward to roam seamlessly between its two networks.
  READ MORE >>  

Was Google Clearwire investment a 'steal'?

We know what Sprint/Clearwire needed: cash to fund a new, massive greenfield WiMAX network. But what did Google, one of the surprise investors in lask week's deal, get for its $500 million investment? And was it something that the service providers in the equation should have been so willing to "sell off"?
  READ MORE >>  

Mobile handset market unaffected by economic slowdown

Despite a widely reported economic slowdown, the global mobile handset market was largely unaffected in the first quarter of 2008. According to iSuppli, shipments rose by a double-digit percentage compared to the same period in 2007.
  READ MORE >>  

iPhone 'jail-breaks' stall growth at OSS firm Synchronoss

Almost by definition, OSS vendors work behind the scenes with little fanfare and even less recognition. That changed for vendor Synchronoss Technologies when its service activation platform earned a key role in the iPhone activation process along with operator AT&T – garnering it plenty of attention.
  READ MORE >>  


commentary

Carrier femtocell pricing doomed?

I’ve been a proponent of the femtocell concept since the first rumblings of the concept came out of the startup community. We like femtocells -- everything about the topic. And really, what’s not to like about something that gives you a “five bar” wireless experience inside your home?
  READ MORE >>  


special report

Differentiate your Ethernet Services: Read Telephony's Special Report

Research shows Ethernet market revenue will grow to $16 billion in 2010. How will you cash in? Read Telephony's Guide to Carrier Ethernet to differentiate your services from the competition and prepare for future challenges. Read Special Report.
  READ MORE >>  


nxtcomm08 news

NXTcomm08 Looks at the Future of Femtocells

On June 18 at NXTcomm08 in Las Vegas, industry experts will review how femtocells – small, low-cost cellular base stations optimized for use in the home and small businesses -- and Wi-Fi technology can co-exist, rather than compete, to deliver a comprehensive digital home experience, and why mobile operators are looking at femtocells as a means to introduce new revenue generating services in “Femtocells: Solving the Integration Challenge?”
  READ MORE >>  


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