Virgin and Sprint are in late stage discussions over an alliance in mobile telecoms.
UK mobile virtual network operator (MVNO) Virgin Mobile and Sprint PCS are in late stage discussions over establishing a network in the US. Virgin would sell mobile phones and services under its own brand, reselling airtime on Sprint’s network to consumers.
If the negotiations succeed, Virgin would be the US’ first MVNO. The company already has virtual networks in the UK, Singapore and Australia, with more planned in Asia soon. All are run as 50-50 joint ventures between Virgin and the network operator – SingTel in Singapore and Australia, and One2One in the UK. A US operation would likely follow the same structure.
The venture would not have all the advantages of a pure MVNO, which would be able to sidestep the wide array of standards in the US by dealing with different carriers in different territories, as it would be tied to Sprint’s network. However, Sprint is one of the few operators with a national, all-digital CDMA service, so the limited flexibility would be less of a problem.
Virgin’s marketing expertise should serve it well. Unlike in Europe and Asia, mobile phones are not yet seen in the US as ‘must-have’ consumer fashion items. Virgin’s cut-price, consumer-focused model could help accelerate mass adoption, especially as the Virgin brand is associated with stylish but good-value products. Sprint would gain too: Virgin would attract predominantly new customers rather than cannibalizing existing business
In addition, as mCommerce takes off, owning customers rather than equipment will be even more important. Having a large number of consumers whose phones default to Virgin’s mPortal should ensure the company becomes a major mCommerce force.
A deal would be a good move for both parties. The only potential problem is that the operator will likely face fierce competition in the market as the MVNO model catches on. In particular, major Internet brands such as AOL are likely to use the model to leverage a major mCommerce presence. Fighting such a giant might not be easy – especially as Virgin’s mindshare in the US isn’t up the levels found in Europe and Asia.
