MVNOs test variety of biz models

As the flurry of mobile virtual network operators that launched in 2006 start to settle in, some are proclaiming customer gains with stand-alone business models-but MVNOs are also taking alternate tracks to promote their brands and content.
Both Helio L.L.C. and Amp’d Mobile reported subscriber numbers in recent weeks. After one year of operation, Amp’d said it was closing
in on 125,000 customers. Helio reported that it ended the year with 70,000 customers and expected to reach the 100,000-customer mark by the second quarter. Parent company EarthLink projected that Helio would end the year with between 200,000 and 250,000 customers.
Both companies said that they are generating average revenue per user of around $100, with about 25 percent of the revenue coming from data services for their young subscribers. That percentage is nearly double the data usage of the traditional national carriers.
However, analyst William Ho of Current Analysis noted these early figures don’t bode well for Helio reaching its initial goal of having 3 million subscribers by 2009.
While MVNO Disney Mobile has been quiet, Walt Disney Co. executives noted in their most recent quarterly call that the company plans to ramp up more in the middle of the year. Growth has been consistent with expectations, although no numbers were disclosed.
“Sales are tracking in line with our plan and we’re pleased with consumer response,” said Tom Staggs, Disney’s CFO.
But MVNOs are finding that the stand-alone wireless business isn’t the only option, or the best route to take.
“Just because you’ve got content doesn’t necessarily mean you should be a mobile virtual network operator,” said Juniper Research senior analyst Sue Uglow, author of a recent report on trends in the MVNO market space. However, she noted in the report, “Companies that have a deep knowledge of a subsegment can be a part of the equation, without necessarily being an MVNO themselves. . [They] will need to turn to partnerships with providers to find another way of doing business in the mobile world.”
Mobile ESPN, another Disney property, certainly took that sentiment to heart. After the MVNO was shuttered a mere nine months after it began operations, the company decided to opt for a licensing model for its user interface and sports content. The entity reappeared when Verizon Wireless announced that it will make the Mobile ESPN application and content available to subscribers of its Vcast data service.
So while content alone does not an MVNO make, it certainly seems to help alternative revenue streams.
Amp’d Mobile plans to launch two international content-based initiatives next month, creating new revenue opportunities without the major investment of launching a stand-alone MVNO. In Japan, Amp’d has partnered with carrier KDDI Corp. to create a content portal. In Canada, the MVNO has a partnership with Telus Corp., which will sell Amp’d service.
Bill Stone, president of Amp’d Mobile, has said that the company will consider a stand-alone MVNO as just one option among many as it expands into other markets.
And it’s worth noting that strong Internet brands like MySpace.com and YouTube opted to partner with carriers or MVNOs in order to take their communities mobile. MySpace started out with an exclusive relationship with Helio, but Cingular also has a mobile application that allows access to MySpace.com. YouTube announced its first mobile distribution agreement in December with Verizon Wireless.
Juniper’s Uglow also noted that revenue sharing between carriers and content companies in the U.S. and Europe is heavily weighted in favor of the carrier-a model that will need to change, she said, because it is content brands and not carrier brands that draw the traffic which generates profit for the network operators.