Most of the new generation of mobile virtual network operators are less than six months into their operations, but that hasn’t prevented a recent spate of speculation and rumors about how well they are doing.
Analysts have generally predicted that there will be some fall-out in the industry as the dust of the MVNO hype settles–and which MVNOs might fall victim to the fall-out is a subject of much debate.
However, until recently there has been little in terms of hard numbers upon which to judge the new companies. Things certainly didn’t look good, though, when MVNO-friendly Sprint Nextel Corp. reported that it lost 31,000 customers in its wholesale division during the second quarter of this year.
Mobile ESPN L.L.C. too saw Merrill Lynch drop its estimate of the MVNO’s subscriber numbers substantially, and analyst Jessica Reif Cohen called for the Walt Disney Co. to “pull the plug on Mobile ESPN” in a research note.
“It should be evident to the company after the early struggles of its ESPN service that this is a relatively unattractive business,” Reif Cohen wrote.
However, other analysts have opted for patience. Yankee Group analyst Marina Amoroso said that she’s withholding judgment until March, giving the MVNOs about a year to get on their feet.
“You need to give them the fourth quarter at least” to attempt to gain traction in the big holiday selling season, Amoroso said. “That’s when they really need to start showing how they’re doing.”
Amp’d Mobile Inc. alone among the new MVNOs has stepped up to give out customer numbers. Peter Adderton, chief executive officer and founder of Amp’d, said that the company expects to have about 50,000 subscribers by the end of this month and is on track to have as many as 150,000 customers by Christmas.
“This is a unique business,” Adderton said of MVNOs in general. “This is a completely different era that we’re moving into and it’s a completely different product.”
He also called upon other MVNOs to give out their customer numbers?but so far, no one has obliged.
The release of customer figures from Amp’d “gives some legitimacy to the space,” according to Amoroso. “Their numbers are stronger than what the Street had been whispering about. And when a company is quiet, you always assume the worst.”
As the new MVNOs get their feet under them, some are changing aspects of their service in an attempt to appeal to and attract the niche demographics that they’re targeting. Customer service in particular is changing, according to Amit Shankardass, senior vice president of solutions planning at ClientLogic, which provides outsourcing for processes such as customer service.
Shankardass said that hiring and training customer-service representatives is more difficult for MVNOs, as most focus heavily on providing unique content.
“The agent has to understand and appreciate the content, too,” Shankardass said. He added that ClientLogic will sometimes provide employees with devices from MVNOs so that they can familiarize themselves with the content and user interface, as well as using elements of the content as part of learning certifications so that the process is more specific to the company and more enjoyable for the employee.
The MVNOs also have spurred a shift in hiring, he said, because the company “literally [tries] to match the agent profile to the customer profile” so that agents can better relate to the customers and a better customer experience will presumably result.
