Are wireless "flanker brands" ahead?

Major wireless operators can no longer ignore lower cost, all-you-can-eat service models being offered by MetroPCS and Leap, said Rory Altman, founder and director of Altman, Vilandrie & Co., telecom industry consultants. “The big decision is whether they can address it,” Altman said. “The only way to do that is by creating a flanker brand with independent distribution – they cannot sell [a cheaper service] in the same store as a mainline brand.”

The lower cost companies have been successful in luring an audience that includes recent college grads and lower income individuals who only want a cellphone, Altman said in a presentation at Citigroup's 19th Annual EMT Conference about growth/opportunity in the communications market last week. To date, the lower cost plans from major players have been predominantly pre-paid, as with Sprint’s announcement today of a $50 pre-paid Boost unlimited plan. In an interview this week, Altman said major operators will have to offer post-paid unlimited plans as well.

While the less costly service would use the same network, there would be a difference in pricing and handset selection, Altman said. This trend has already taken hold in Canada, where Rogers has repriced its Fido service down market, Bell Canada is operating a Solo brand and Telus has launched Koodo, Altman said. “Apparently it’s important for the side brands to have cute two-syllable names.”

But the two brands can’t sit side by side on the same retail shelf, Altman cautioned.

Another intriguing growth possibility for wireless is the potential success of secondary devices of a specialized nature such as the Kindle or digital cameras with broadband access built in, Altman said. “This includes any device that operates that is not a phone but wants to ride on the network,” he said. “What’s interesting to me is Web access in my car. It’s a great opportunity.”

On-demand information, videos, gaming and specialized travel applications are all things consumers want to access in a car, Altman said. “We want so many things in the car that we don’t have; the question is, who is going to step up and make it happen? Will the car companies do it? Will Google or Yahoo? For the auto industry, they want to make sure it’s not like the 1970s car stereo boom, when they were cut out of the value chain. But we have not seen anybody in the wireless industry really sort of address it yet.”