Saturday, March 21, 2009

MVNOs-New Models, Old Problems

Yet another MVNO is launching in the US next week. And this one hopes to achieve success with a twin combo of VoIP and flat rate plans and completes the combination with a prepaid plan. Zer01 Mobile hopes to achieve what multiple others have tried and failed at. Run a successful MVNO! The model, as in the case of multiple other MVNOs is quite interesting. The company claims to have developed it's own applications for most of the current smart phones, and all calls are routed through VoIP by it's application that is closely integrated with the handset dialpad.  The company's business model appears to be intriguing in ways more than one. They claim to have their own IP backbone, and rely on roaming agreements with AT&T and T-Mobile. And incredibly enough, also claim to have fine-tuned their VoIP platform to even work on GPRS & EDGE networks!! Remains to be seen if they actually go beyond their closed beta and launch commercially. Success, however, is an altogether different ball-game. 

High costs of subscriber acquisition coupled with extremely ambitious targets have seen many an MVNO burn cash like there's no tomorrow. Indeed, apart from Virgin Mobile in the UK, there aren't too many successful MVNOs across the world. Of course, there are some of the smaller, interesting and arguably successful examples across some of the Benelux countries, and then there's the new kid on the block, Blyk. 

India's experiment with MVNOs, although still caught in regulatory and inter-departmental conflict, will be quite interesting to see. With limited uptake of data services, and a larger problem surrounding scarcity of spectrum, it will surely take some serious thinking to break the MVNO conundrum !
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