The Challenge of Disrupting the Wireless Business

by • August 10, 2015

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The reality is, especially in the U.S., only one MVNO has ever been truly successful over the long term — TracFone, owned by Mexico’s America Movil, and providing services under a variety of brands, including TracFone itself, as well as Straight Talk and Net10. The only reason TracFone is so successful is that it goes after the very lowest end of the U.S. wireless market, a segment extremely difficult to serve profitably if you’re subject to traditional carrier economics, and which the major carriers would rather leave to third parties than attempt to target themselves.

Every other MVNO launched in the U.S. market has either failed or succeeded by targeting a very small and focused market that the carriers can’t justify going after directly. An Apple MVNO clearly wouldn’t fly in the U.S., given these two rules — Apple would take away the most attractive customers the operators have, and would do so at a substantial scale. Why would the major operators ever support this? Google Fi is relatively unthreatening because it’s currently tied to a single device with limited appeal, heavily bounded by the closed beta, and limited by Google’s inability to effectively support a large-scale end-user service which requires heavy customer support. I believe Sprint and T-Mobile have supported it precisely because they don’t feel it’s a threat, and because they both need to increase their overall scale to compete with AT&T and Verizon.

Google and Facebook’s Efforts Won’t Affect the U.S.

The other idea that’s always appealing to would-be disruptors is going back to the drawing board and inventing some new way to provide wireless service. In that category, we currently have Google and Facebook’s efforts to provide wireless connectivity using airborne technologies. Google’s Loon effort uses balloons, and finally has its first commercial deployment lined up in Sri Lanka, while Facebook has recently revealed the name and some details around its wireless drone project.

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