Friday, July 31, 2009

Sprint Buys Virgin Mobile, the Last MVNO

Sprint Nextel will acquire the majority stake in Virgin Mobile USA that it doesn't own: Virgin Mobile was the last major mobile virtual network operator (MVNO), a cellular company type that owns customers not cell towers. While there have been attempts to create large MVNOs, only Virgin Mobile has remained viable, although not wildly profitable. Sprint was an investor in Virgin Mobile, and many said that was what gave the MVNO staying power. Most recently Virgin Mobile absorbed Helio, an MVNO started by SK Telecom and EarthLink to bring advanced phones from South Korea to the U.S. market and target services at younger folk.

Virgin Mobile concentrates on prepaid phone service, which is distinct from the postpaid contract offerings that require long commitments. With prepaid service, you pay in advance for minutes or no-contract subscriptions, and wind up paying substantially less. Virgin Mobile has a $50/mo unlimited talk plan, which contrasts with postpaid plans that are twice as much. (Virgin Mobile requires 2-year commitments on smartphones under the Helio brand, however.)

The company also has the only pay-as-you-go mobile broadband service. You have to pay upfront for a $150 USB 3G modem--sold exclusively by Best Buy for Virgin Mobile--and then service has no commitment. You buy pools of expiring bandwidth. $10 gets you 100 MB over 10 days; $20, $40, and $60 get you 250 MB, 600 MB, and 1 GB over 30 days. If you need more bandwidth, you buy another pool--no sneaky $50/MB overage fees.

While the broadband prices are high compared to Wi-Fi (Boingo with $10/mo unlimited North American hotspot access, for instance), they are extremely favorable when looking at major carrier 3G plans, which are $60 per month with a required 2-year commitment. Those plans, however, top out at 5 GB of use per month.

The biggest segment of growth for Sprint is prepaid plans, but it's sold such plans on its iDEN network, the old Nextel technology that will some day fade away. Virgin Mobile uses regular old CDMA, and brings over 5 million customers.

Cheryl Cole will not work with Chris BrownWhen It’s Too Good To Be True: Zer01