Are we seeing the end of MVNO (Mobile Virtual Network Operating) companies? Channel Partners Online believes so. In a recent article they shared why the collapse of Solavei and other companies are happening and will continue to leave the scene:
The MVNO scene in the United States is in the midst of a shakeup, according to reports.
And, frankly, the news doesn’t come as a big shock as the MVNO model – where companies lease network access from a larger wireless operator and then bill, usually without a contract, under their own brands – has come into question. That’s because providers including AT&T, Sprint and T-Mobile now offer their own bottom-dollar, no-contract services with the backing of more financial resources than their smaller rivals.
As a result, the following initiatives have come to an end: RadioShack’s Leap Wireless partnership; Spot Mobile’s and Solavei’s offerings, which ran on the T-Mobile network; and Chit Chat Holdings’ service, which relied on Sprint.
First, Fierce Wireless reported last week that RadioShack has put the kibosh on its no-contract product. The once-formidable retailer launched its prepaid service in 2012 but, contrary to most MVNO arrangements, had Leap provide the billing, not just the access.
That partnership came to end after AT&T earlier this year finalized its $1.2 billion acquisition of Leap Wireless, which operated under the Cricket Communications name. To be sure, Leap gave AT&T 5 million more customers and a stronghold in the prepaid business. Meantime, RadioShack has been struggling to survive and probably was unable to compete with the company it was using to provide its no-contract service.
Indeed, AT&T said it intended to use Leap to “shake up the no-contract segment with a combination of simple, low-cost rate plans; a terrific lineup of smartphones; and a great network experience … with access to AT&T’s nationwide 4G LTE network covering nearly 280 million people. The nation’s second-largest wireless operator also planned to expand Cricket’s presence to more cities; it was not clear why the RadioShack-AT&T deal ended, but the combination of AT&T’s move into the prepaid segment paired with RadioShack’s declining financials seems reason enough.
Next, Spot Mobile, which teamed with T-Mobile, is shutting off its service on Sept. 7. Spot Mobile’s website notes that the company had a contract with the underlying carrier that matured, and a sale of Spot Mobile did not happen as hoped. Spot Mobile operated as a traditional MVNO, buying network access from T-Mobile and providing billing under its own brand.
Spot Mobile is the second T-Mobile-dependent MVNO to shut down this summer. In June, Solavei said it had filed for Chapter 11 bankruptcy. Executives said they had not gotten enough customers by May 31. That news comes as T-Mobile has fought hard to lure (and succeeded in getting) prepaid subscribers.
Finally, Chit Chat Holdings, which debuted its East Coast-only MVNO service late last year, also has filed for Chapter 11. The company says it hasn’t been able to settle a billing dispute with Sprint, so it had to seek protection. Chit Chat claims it did not receive data usage billing information on time, which led to a billing dispute reportedly worth several hundred thousand dollars.