MVNO Landscape Shrinking! What Does The Future Hold?

The last few months have been a trying time for MVNO's in the US, with many companies like Emabrq, Movida and Sonopia closing it's doors and others like kajeet rapidly downsizing. Clearly one of the few MVNOs that managed to succeed (an I use that word loosely) is Virgin Mobile, but even they are having a tough time as of late adding subscribers.

If you look at the wireless industry in the US as a whole, it is clear why MVNOs are having a difficult time:

1) Post paid wireless companies like Sprint are now offering flat rate all you can eat plans. They are a bit expensive right now but that price will drop considerably over the coming years making prepaid services less necessary to help users manage their spending.

2) Rapidly changing handset technology and the coolness factor of phones is what usualy drives a customer to a particular brand or service. This has always been the achilles heel for MVNOs, as they generally have less variety and are usually forced in to lower cost phones to keep their entry costs low and appealing. The iPhone in particular is what is causing youth oriented MVNOs like Virgin Mobile USA a lot of problems.

3) Not owning the actual customer and just renting time from one of the big three will always be a major hurdle. Verizon or Sprint will never provide pricing to the MVNOs to allow them to compete with their own retail brands... they will let them get close but never ahead!

4) Data plans are gaining ground and traditional MVNOs have either not had a data type plan or did not have competitively priced plans in the past (most still don't even have the handsets to support it).

In the end I think we will see only a handful of well positioned players in the MVNO business who managed to overcome and address all of the above issues. I will even take it a step further and say that in 5 years we will not see any MVNOs left as those that managed to survive are bought out by the major players like Verizon, Sprint and T-Mobile who will have no choice but to gobble up these companies to grow their subscriber base in a completely saturated market.