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Verizon, LightSquared and the New MVNO Opportunity

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Tara SealsDid you know that the number of service providers in the MVNO market is expected to exceed the number of network-based wireless carriers by 2013, according to Wireless Intelligence? It’s not just 3G, either: Both Verizon Wireless and LightSquared are ramping up their wholesale LTE efforts too. More on that in a bit.

The MVNO space is a market that’s been a bit under the radar screen ever since the spectacular implosion of the brand-based market a few years back (remember Disney Mobile?). But this reseller segment is gaining steam again, accelerated by connected business models (think Kindle) and movement in the rural and Tier 2/3 space. And for a company with no network differentiator to fall back on, guess what becomes key? That’s right – intelligent billing bundles, customer service and personalization.

“You can really see innovation being driven in the MVNO segment," Redknee Inc.’s Humera Malik told me this week. Redknee offers a converged platform for MVNOs globally, like KPN Spain. “The customer experience becomes key for an MNVO, and they’re looking for solutions to set themselves apart."

Specifically, MVNOs launching new data services need to be able to better target their subscribers, which requires clear visibility into usage information, and the ability to stimulate and reward usage in real-time. For instance, time-of-day offerings can often be differentiators – consider the ability to offer dynamic promotions at low usage periods, or “happy hour" pricing for off-peak times. Other differentiators are the ability to micro-segment demographics with market-specific services and pricing strategies.

MVNOs also need to effectively identify cross-bundle opportunities, using subscriber behavior to launch targeted promotions and incentives faster to the market than the other guys.

Then, of course, there’s customer service – MVNOs are looking for self-care features, balance management, SMS-based account alerts and the like.

4G will create even more opportunity for back-office enablers looking to tap this market. At Mobile World Congress, LightSquared and Verizon Wireless both offered a look ahead in their wholesale roadmaps for LTE.

For its part, LightSquared said that it is very close to announcing its first reseller partners; it has apparently signed contracts with five partners to run brands on a wholesale-only LTE/satellite hybrid network. The partners include a national retailer, a device manufacturer, one website and two carriers. It also said that Qualcomm is funding development of a dual-mode chipset for handsets, dongles and other form-factors that can take advantage of the mix of technologies that it has in its network. LTE will cover most applications; but satellite connectivity is there to fill in the blanks and provide connectivity for some unique applications, particularly video-friendly ones.

Gaining scale will be important for LightSquared; it is coughing up $7 billion over eight years to for Nokia Siemens to build and manage a network that covers 100 million Americans by the end of 2012, and 260 million by 2016. In fact, as a condition of obtaining its license, the FCC is requiring the company to make those deployment targets. That's all adding up to a wee bit of pressure to sign up resellers to populate its network, stat.

Meanwhile, Verizon Wireless named six partners for its LTE in Rural America program. Bluegrass Cellular, Cellcom, Cross Wireless, Pioneer Cellular, Strata Networks and Thumb Cellular have leased spectrum that combined covers more than 1.8 million people and nearly 58,000 square miles in Kentucky, Oklahoma, Michigan, Wisconsin and Utah.

Under the program, introduced last June, Verizon Wireless will work with rural companies to collaboratively build and operate a 4G LTE network in their areas using the tower and backhaul assets of the rural company and Verizon Wireless’ core 4G LTE equipment and 700 MHz spectrum. In addition, customers of participating companies will have access to Verizon Wireless’ nationwide 4G LTE network and those of other carriers in the program. Verizon Wireless customers also will be able to roam on 4G LTE networks built by program participants.

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