Not all subscribers are equal.
While big-spending, low-churning direct subscriber adds are often best, there are only so many of them to go around. As such, the value of indirect subscribers is evolving as some operators begin to depend more heavily on these customers and other operators find them less lucrative.
Indirect subscribers use carriers’ networks, but are contracted with an MVNO or reseller. Carriers generally do not make as much money on these users, but need them to continue to grow their business and get customers they otherwise wouldn’t.
In announcing its second-quarter net subscriber adds, Verizon Wireless said all of its 1.8 million net adds were direct subscriber adds, “that is those customers that the company directly serves and manages.” This means that its resellers and MVNO partners collectively lost customers. So Verizon Wireless likely doesn’t value them as much-at least not this quarter.
But Sprint Nextel Corp. is adding a substantial number of subscribers through its indirect channels. In Sprint Nextel’s case, this includes Boost Mobile L.L.C., Virgin Mobile USA L.L.C., the affiliates it hasn’t yet bought and other MVNOs and resellers. Indeed Gary Forsee is preaching that Wall Street should change its opinion of prepaid and MVNO customers; not surprising when you consider Sprint Nextel counts so many of its net adds-literally millions-from those partners.
And one need only look at the fracas in Texas between Leap Wireless International Inc. and T-Mobile USA Inc. to see how valuable dealers are to these carriers. Leap is suing T-Mobile USA, charging the nation’s fourth-largest carrier with interfering with Leap’s contracts with indirect dealers in the Houston area. T-Mobile USA says it’s just trying to continue strong relationships with its dealers.
Dealers that provide carriers a good indirect customer are likely to gain more credibility with those operators; those that bring little to the table may find themselves without a seat at said table.
c On a different note, we’ve tweaked our editorial pages a bit. We’re beginning two new columns this week toward the back of the newspaper-check them out. “Etc.” on page 24 is designed to showcase some of the light-hearted things taking place around wireless; Hedgehogging, featured on page 25, is a weekly column of things that make RCR Wireless News journalists stop what we’re doing to praise, pander or otherwise discuss with our fellow reporters.
Tell us what you think. E-mail me at tford@crain.com.
