Virgin Mobile's success triggered the emergence of competition, most notably Boost Mobile, which also targets the youth market, and Qwest Wireless, which adapted its status from Sprint affiliate to MVNO on Sprint's network. More recently there have been reports that ISP EarthLink plans to launch as an MVNO in Q2 2004, although no further details have yet been revealed. Other companies are also looking at entering the wireless space through the medium offered by the MVNO model, seeking to take advantage of the existing strength of their brand, their loyal customer base and their perceived expertise, knowledge and quality within a given industry. Thus Disney, ESPN, Warner Brothers, MTV, AT&T and certain retailers are all examining the MVNO model closely.

AT&T to return to wireless?

Perhaps the most notable of those companies considering entering the wireless market as an MVNO is AT&T, which spun off its wireless business in 2000 in order to cut debts. With AT&T Wireless having been bought by Cingular Wireless (), the AT&T brand is due to disappear from the wireless market when the deal is completed towards the end of 2004. Acknowledging the likelihood that a significant proportion of AT&T Wireless' 21.6 million (at the end of 2003) subscribers will be brand-loyal, AT&T is keen to secure the brand's maintenance in the wireless market. To this end it has commented that it will move into the wireless market as soon as possible after the Cingular/AT&T Wireless deal is completed.

Details of its planned return have been closely guarded. AT&T may seek to tie up with a nationwide wireless operator (Verizon Wireless, Cingular Wireless, Sprint PCS or T-Mobile) and in so doing establish an agreement with a company that is essentially a competitor. AT&T is, after all, the largest fixed-line operator in North America and is competing with wireless companies. However, by managing such an agreement, AT&T would be able to take advantage of the high level of coverage afforded by its partner's wireless network (whichever partner it chose) and the broad spread of services the partner was able to offer. The alternative would be to tie up with a smaller player, such as Nextel or Dobson. This route would allow AT&T to avoid direct competition with the major operators in the wireless space but would reduce its appeal. Whichever option it chooses, the prospective MVNO agreement is an indication of how fixed-line companies are seeking to make wireless an integrated part of their business.

The packaging together of fixed-line and wireless services has already been seen in the market, with the likes of Cingular Wireless selling services in conjunction with the fixed-line services of its parent companies BellSouth and SBC. AT&T attempted to offer a complete package of fixed-line, wireless, TV and other media services before it spun of its wireless arm. The decision to consider an MVNO strategy is the next move in this trend, since operating as an MVNO allows a fixed-line operator to compete directly in the wireless space without having to directly sell another company's wireless services. The move will also put AT&T in a strong position to offer bundled services, building on the momentum already established in this area by the likes of Cingular Wireless.

Content kings see limited reward at present

The prospect of winning wireless customers based on the strength of a brand and the appeal of the content a company can provide is attracting the likes of Disney, ESPN, MTV and Warner Brothers to consider the MVNO model. These companies would be able to offer tailored content from their extensive business portfolios, supplying image, sound and video downloads, together with games, wallpaper and interactive services. This means that they would be able to offer greater value than MVNOs that focus solely on voice and is the major reason why rumours of these companies' entry into the wireless market have circulated for so long. However, while these companies would be able to offer ringtones, graphics, games and basic textual content over present networks and handsets, the immaturity of these networks and handsets with regard to high-level data services has to date hindered the MVNO strategies of these players.

Once W-CDMA and CDMA2000 1xEV-DO networks are firmly established in the market, the MVNO business case for the companies mentioned above will be strengthened considerably. At present, the offerings over these technologies are largely directed at corporate users and operators running such networks have yet to see large-scale uptake of the services or devices offered. Though SMS usage is growing in the USA, data revenues still represent no more than 3-5% of total revenues in the USA and data subscribers continue to represent only a small proportion of the total subscriber base. The mass market, albeit the youth niche, is what Virgin Mobile has already targeted but its success has been founded on voice services. Data services for the large-scale consumer market is what the likes of Disney, ESPN, MTV and Warner Brothers are interested in, but they may be waiting for a while longer yet before it becomes viable for them to launch as MVNOs.

The MVNO model is gaining credence and more companies are launching as MVNOs, but the market is not yet right for certain companies that are currently examining the model. There are likely to be additional MVNO launches in the USA in the future, though just when these will occur is not yet clear. When they do, rather than further consolidation in the market consumers will see further fragmentation and a larger number of brands in the wireless space, affording them greater choice.