Although consolidation continues to thin out the carrier crowd, the actual number of companies offering wireless services soon could increase. At least, that’s what Matt Johnson is hoping.
Johnson is the co-founder and chief executive officer of Visage Mobile, a mobile virtual network enabler. MVNEs sell operating blueprints to companies that want to launch wireless services as mobile virtual network operators. Johnson explains that Visage’s MVNO template can cut down the cost of launching a branded, nationwide wireless service to just $2 million.
“We’ve done everything that the MVNO needs except a brand and a product,” Johnson explained.
Virgin Mobile counts more than 2 million customers. Other companies like Qwest Communications, ESPN, 7-Eleven and even AT&T Corp. are entering the space. Consulting firm A.T. Kearney predicts that there will be more than 15 different MVNO offerings by 2010, and that at least three will be major, well-known brands. The firm said that by that time MVNOs will account for more than 15 percent of the U.S. wireless market, or 25 million subscribers.
Thus, the market for MVNOs is major. Visage joins the likes of InPhonic, DBS Communications, Ztar Mobile, CSG Systems Inc. and Martin Dawes Group in hoping to take advantage of the opportunity by helping brands launch their own wireless services. Basically, carriers supply airtime, MVNOs offer brands and marketing campaigns, and MVNEs like Visage provide the glue between the two.
Visage last week scored a major boost for its MVNE efforts with an injection of $22.8 million in venture funding. Worldview Technology Partners led the company’s third funding round, and all of its Series B investors participated as well. The funding brings Visage’s total venture capital war chest to more than $50 million.
“The big news for us … is that it (the funding) puts us in a really good position,” Visage’s Johnson said.
Johnson said Visage acts as a one-stop shop for companies that want to launch wireless services. Visage has agreements with more than a dozen partners to cover all of the facets of wireless, including activation, customer relationship management, billing, payment, bill printing and financial management and reporting. The company also sets up network connections with carriers.
Johnson said Visage has already built the MVNE platform, and a company needs only to plug into it to launch wireless services. Visage’s platform can handle multiple MVNO offerings as well as connections to multiple carriers.
“We bring everything,” Johnson said. “The platform has been paid for upfront, so you would just buy rent space.”
Johnson said it can cost a company between $30 million and $50 million to build and deploy its own MVNO technology. Visage lowers that cost to $2 million or less. With those numbers, a company can see a return on its MVNO investment with a subscriber base of just 100,000. Johnson said the ROI calculation would depend on how much a company spent on marketing its MVNO service.
Johnson said one of Visage’s customers has already launched wireless services as an MVNO. He said he expects at least two additional companies to launch MVNO services through Visage by the end of the year. Johnson declined to name the customers or carriers providing airtime.
Johnson also declined to discuss Visage’s financial position or when it expects to reach break even. He said the company would be able to raise additional funds from its existing investors. Visage’s continuing investors are Mobius Venture Capital, Advanced Technology Partners, Vesbridge Partners (formerly St. Paul Venture Capital), Emergence Capital Partners, Palisades Ventures and Selby Venture Partners.
