Larry Press: Can Sprint’s Virtual Wireless Carriers Compete?

What will the increased competition from Sprint’s MVNOs mean?

Is the wireless oligopoly beginning to fade?

AT&T CEO Randall Stephenson outlined his vision of the future of the wireless industry. He sees a market with a few carriers that control a lot of spectrum, and a shift from voice minutes to all-data during the next few years. Carriers will charge enough for that data to maintain their customary revenue and profit.

But one of those carriers, Sprint, seems to be doing something unusual — competing.

Sprint is competing by partnering with mobile virtual network operators (MVNOs) that sell access to the Sprint network. Users have to buy their phones up front, without subsidy, but they get flexible, cheap voice and data plans in return. The MVNO gets less revenue per user than AT&T or Verizon charge, but the MVNO and Sprint must be profiting or they would not be doing it.

The net result is that wireless is cheaper and customer bills more accurately reflect the fact that voice calls, text messages, and data are all bits.

Since the user pays full price for a phone, the MVNOs do not require two-year contracts, but they lock you in by insisting that you buy your phone from them — you cannot bring your own. Phone portability should improve with market pressure and the widespread adoption of fourth-generation (4G) cellular technology.

MVNO phone selection is limited, but that may be breaking down. Sprint recently picked up the iPhone and they announced that Virgin Mobile, one of their MVNOs, would also get the iPhone. It is possible that Sprint MVNOs will offer all Sprint phones in the future.

Virgin is not Sprint’s only MVNO. Ting has effectively done away with the concept of tiered service — you pay for what you use. Virgin and Ting are early, but there will be others. One that is in beta, Republic Wireless, hopes to charge even less by automatically substituting WiFi for cellular connectivity whenever possible.

AT&T has their ideal vision of the future, and I have mine — the ability to own my own phone, use it on anyone’s network and only pay for the bits I send and receive.