With several mobile virtual network operators targeting ethnic or immigrant markets, low-cost international calling is one of the key potential differentiators in a marketplace that demands differentiation.
It’s a space where MobileSphere saw an opportunity, and in the year or so since it began offering international long distance services to MVNOs, the company has picked up seven contracts so far and plans to announce several more in the coming months.
International long distance isn’t something that carriers usually want to encourage their MVNOs to offer, according to MobileSphere’s executive vice president and co-founder, Gavin Macomber.
“The host carriers largely restrict or discourage MVNOs from reselling international long distance directly-or if they do, it’s at fairly expensive rates,” Macomber said.
International calling is an expensive proposition for the customers of wireless network operators, although the per-minute cost varies wildly from 5 or 6 cents per minute to as much as $1.50, depending on which country is being called. Often, customers have to specifically request that their phones be enabled to make international calls, and carriers may make even postpaid customers wait two or three months before they’re allowed to do so. And choosing a wireless carrier typically means that customers lock themselves into whatever the carrier offers for both domestic and international calling-unlike the wireline marketplace.
“You can’t call Verizon (Wireless) and say, `Switch my long distance to Qwest’-you’re in a two-year contract,” Macomber said. “They price it there because they can.”
MobileSphere said it can offer cheaper international rates because it routes calls off of the host carrier’s network. Calls placed through carrier partners go through MobileSphere’s own softswitch in Boston and then out over an international Tier 1 fiber network. The network belongs to MobileSphere’s long-haul carrier partners. Besides MVNOs, the company also offers its services to businesses and allows consumers to sign up directly for service regardless of their wireless carrier. The company also provides wireless long-distance service for more than 20 universities, and in May announced a partnership with MVNOs XE Mobile and Liberty Wireless to offer phones integrated with its international long-distance service.
International long distance has been getting more attention recently. Through the end of the month, Verizon Wireless is running promotional pricing on its $4 per-month international calling package, which offers discounted rates in many countries for consumers; the campaign was centered on the FIFA World Cup in Germany. Also, MVNOs who are targeting ethnic markets frequently want to offer deeply discounted calling rates to one or more specific countries in order to appeal to their chosen demographic. Within the past year or so, Cingular Wireless L.L.C. has added international calling to its prepaid GoPhone service.
Macomber noted that MobileSphere also doesn’t have to worry about some of the common problems that carriers face in offering long distance: outright fraud, or bad debt that comes with callers racking up large international bills and then not paying.
When the company started in 2001, Macomber recalled, “I think we were a little bit ahead of our time. Most consumers, even international students and recent immigrants, just didn’t think about making international calls from a cell phone. But in the last few years, you’ve had this massive migration from landline to wireless.
“Many people today … use cell phones for all their calls,” Macomber continued. “They want to be able to make international calls from a cell phone.”
