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At the CTIA exhibition in Las Vegas, SprintNextel stated it did not expect to add more MVNOs on its network over the medium term. Instead, the company plans to focus on those brands with which it has already signed agreements and assess their performance. Sprint’s new stance carries substantial implications for the shape of the MVNO landscape in the US market, and provides additional insight into the wholesale strategy of the carrier.
SprintNextel is applying exactly what it has always stated, namely that the brands it allows on its network would need to be complementary to its own, rather than compete head-to-head. And so it has been: Virgin Mobile targets a prepaid, low-end user base. Mobile ESPN targets a high-end, sports oriented niche, and Disney goes after the pre-teen and tween segments. Taken together, all those brands appear to truly extend the SprintNextel network; this approach appears different to that observed in some European markets, where MNOs often seem to compete head-on for customers with the MVNOs they are hosting.
The SprintNextel stance will have some far-reaching implications. Sprint has long been the most accommodating of MNOs (Cingular is more conservative and Verizon more hostile); its closing the spigot will shape the US MVNO marketplace. One major implication is that the US MVNO market is bound to be dominated by ventures supported by strong players with established brands, rather than companies built by entrepreneurs. The second implication is that niches will only go so far; the MNOs’ discriminatory approach to hosting means that niche concepts such as MVNOs focusing on fans from a given football team are unlikely. Finally, the SprintNextel stance is a threat to the mobile virtual enabler (MVNE) model. The MVNE model (at least in its initial iterations) has been based upon supporting multiple MVNO ventures. If MNOs limit the absolute number of MVNOs they host on their networks, many MVNEs may have to review their business models.
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