MVNO Experiments

So 2007 saw the demise of a couple MVNO experiments.  Disney Mobile and Amp’d both shut their doors to world in the midst of a growing mobile sector.   It’s rare to hear in the news about companies failing due to bad management, the finger is always pointed to a  bad business sector or  inferred culpability on the model.  MVNOs are not bad models, we have many successful ones in the industry today, Virgin, Boost, Net10, Movida, and the list goes on, just visit Walmart to see.   I was in LA working for one of these MVNOs and was very close to the others when they were just emerging into the market.  There are a few key elements necessary for success; understanding your demographic, affordable  price plans, device pricing , and prepay.    While Disney focused on the Tween and Suburban Mom they failed to see that Moms are the CFO of the house and that although having a family friendly service, pricing was the driver for demographic.  Disney as a reseller couldn’t compete with the family plan offerings of AT&T and Verizon.    Amp’d catered to the active and hip youth, but failed to realize that that demographic doesn’t have the income to pay their bills and are still fairly irresponsible financially.    The successful models all have low cost devices and prepay in common.  The prepay guys are doing well, and there is little risk in providing a service where users don’t get a subsidized device and pay upfront their usage.  Go ahead and buy the device and credits, you loose the phone or talk too long , the MVNO still gets paid.   Also, a major demographic that is ripe for the prepay MVNOs is the unbanked, whether you are a young teen, sub-prime credit user, or immigrant without papers, you can still get a service, and those demographics are huge.