The disruption of the MVNO

By now, it's accepted wisdom that there's a role for the mobile virtual network operator to play in the mobile ecosystem. However, the MVNO is about to enter a new stage — one governed by a packetized world in which data services play a huge role — and we don't think many MVNO decision-makers have thought through the strategic implications well enough.

Simply put, wide area, wideband broadband data services such as EV-DO stand to disrupt just about everything there is about an MVNO play. Clever players will see this now and do something about it.

Granted, EV-DO has had its fits and starts. As with any new technology rollout, there have been the issues of coverage, consistent service quality and hype. These will get resolved over time, however. When they do, EV-DO stands to disrupt the whole Wi-Fi model as well as put pressure on the upcoming Intel-pushed WiMAX craze, by offering a reliable, national, high-speed, broadband data service for which people are willing to pay.

We've heard a lot about Mobile WiMAX and how it's going to change the world. It might, but the carriers are deploying EV-DO in earnest now, and they're not talking about scrapping those networks for WiMAX any time soon, despite the heavy promotion of WiMAX standards agreements and interoperability demos. Undoubtedly, the fact that the first WiMAX Forum-certified products were only for fixed wireless and only for 3.5 GHz systems will give EV-DO an early market advantage.

Indeed, with Rev. A, EV-DO is on the verge of a true jump to lightspeed, and we're not sure everyone is ready for it. Right now, we're in EV-DO Rel. 0. Speeds are at 2.5 Mb/s downstream and 0.153 Mb/s upstream, with a real-world performance level of 400 kb/s to 700 kb/s. The upstream bandwidth is a huge drawback, and makes EV-DO Rel. 0 merely an evolutionary bump up from the 1xRTT and other 2.5G speeds.

Rev. A moves the downstream up a tad bit, to 3.1 Mb/s, but it just explodes the upstream to 1.8 Mb/s. Now we're talking — literally. We will be able to launch Skype and carry on a decent conversation, do bandwidth-intensive server applications, quality of service, Layer 7 processing — all sorts of good stuff.

But most important, Rev. A EV-DO is packetized. To date, the MVNO has been built around a circuit-switched world. EV-DO will allow a whole new cost structure in which an MVNO can operate. For all the reasons that the world's enterprises are moving to IP PBXs and consumers are loving Skype, MVNOs will have incentive to quickly migrate toward a dual-mode environment in which packetized voice is the preferred mode of operation.

With packetized voice and data apps running over the same connections, MVNOs can create dramatically new service packages that allow them to focus on specific market needs and to partner with other brands to build an ideal service: Cut a deal with Skype. Be Vonage's wireless access. Create a community push-to-talk network. Build local apps that integrate voice, data and information portals together. Once it's all IP, so much is open now that wasn't in a non-integrated circuit-switched world. Slap an 800 MHz processor in there, and you have enough processing power for simultaneous network-accessing applications using wideband codecs. The sky's not even the limit.

To be fair, EV-DO is not the only high-speed mobile wireless technology out there, and certainly the opportunities presented here apply elsewhere. Some players, such as Verizon, specifically forbid these advanced uses of its EV-DO network. But the point is that MVNOs should think about what access to a national packet-oriented high-bandwidth infrastructure does to your underlying business plan, and start the discussions with potential partners. From a cost and functionality perspective, national broadband wireless data should be remaking your whole outlook.

Daniel Briere is CEO of TeleChoice, a market strategy consultancy for the telecom industry. He can be reached at (860) 429-0100 or dbriere@telechoice.com.