Another MVNO Bites the Dust

Voce, the Beverly Hills-based MVNO, has joined the likes of AMPD, ESPN and Disney MVNOs (Mobile Virtual Network Operators) in the dumpster, amid hundreds of millions of investor capital written off as a bad idea.

Yes, it is hard to run a carrier, and apparently even harder to run a virtual carrier. What is the lesson here? I think you need to consider what it means to build a brand over night, and how $500 million dollars, or having the backing of Disney, does not help. The exercise here for the executives at these failed MVNOs was to take a bunch of cash, build a brand overnight, come up with new and creative ways to market, and take customers away from giants AT&T, Verizon and Sprint (while turning around and paying those respective firms a fee for each subscriber since those networks ultimately hosted the end user). I suppose on paper it looked great.

What is the secret sauce that Virgin has to compete? Or Boost Mobile? Or Helio? What part of the success (or failure) is dependent strictly on brand appeal? ESPN had an offer for sports fans, Disney for kids, AMP'd for hip teenagers, VOCE for rich MoFos...and they all failed to attract a subscriber base to simply break even.

First, switching costs are huge for individuals. Rarely can a person simply switch carriers on any day they feel like, and I would think this is the top factor of the failure rate. With most US consumers locked into a 2 year contract, there was not even a chance to get these people to move in bulk. I believe a more holistic, organic growth plan should have been in order for a strategy here, and from what I can see, this has been Virgin's plan. Boost and Helio have followed the same path as the others, and their lifespan does not look healthy. Sell short.

History of the company here: What happened to Voce? [IntoMobile.com]