Wednesday, October 03, 2007

Prepaid Cellular Services MVNO action in the U.S. for Store Owners!

MVNO action in the U.S. for Store Owners!
The year 2007 saw significant growth of the prepaid wireless market in the United States as many new players arrived on the scene, and the landscape changed dramatically. Helping to fuel this fast and steady growth has been a "grass-roots movement" of prepaid long distance carriers and other telecom based companies that started MVNOs in this very hot telecom sector. What is an MVNO? MVNO is an acronym for Mobile Virtual Network Operator; MVNOs have become a significant trend in the prepaid wireless market.

Value proposition
What seems to be attractive to merchant retailer is the leverage they receive with the MVNO model. Merchant are able to set up relationships with one or more companies whose sole business model is prepaid wireless. These companies have defined business plans targeting different segment profiles that range from the youth market, credit-challenged market, first-time users and ethnic markets.

Under this scenario, the retailers are able to eliminate the financial commitment and resources needed to properly address the prepaid wireless market. They completely eliminate any inventory costs for acquiring subscribers and place all operational and financial responsibilities on the MVNO. What they gain in turn will hopefully be a large number of prepaid wireless subscribers using their store to top-up through a relationship with the MVNO with little or no financial risk.

The MVNO model is very similar to the long distance reseller services model that was widely deployed by AT&T, Sprint and MCI back in the late 80s and early 90s, when these carriers established reseller arrangements with a large number of companies that branded their own long distance products using the carrier's network to provide service. Today, we are seeing a repeat of this very successful business model except that the product is now prepaid wireless.

Recognizing the slow growth of the prepaid phone card market, many industry players see that prepaid wireless is beginning to erode the prepaid phone card market. Merchant dealers are now selling as much as five to one in wireless sales compared to phone card sales in many markets. Many prepaid long distance carriers, acknowledging this growing trend in prepaid wireless. Whether the action is to create an MVNO with their own privately branded product or to market and sell other wireless brand products alongside their prepaid calling cards, merchant business owners must make a choice or risk losing significant business.

The success of companies like Virgin Mobile, Boost Mobile, TracFone and other MVNOs in the market is a validation of this strategy. While some make the decision to sit and watch as prepaid wireless begins to dominate the prepaid sector, many established players from the prepaid phone card industry are making the decision to jump in and get their piece of the prepaid wireless pie. Through these MVNO-type relationships, a growing contingent of industry players are planning to leverage their established brand names in the prepaid wireless sector as well.

31 flavors and more
Going beyond the prepaid wireless programs of major carriers, there is now a wide variety of new choices thanks to the MVNO market trend. While the market may seem to be getting a bit crowded, you can expect at least another dozen or more new MVNO startups in the coming year. Many of these new players will start off as regionally based operators with hopes of rolling out national plans. Executing in more controlled regional or select markets seems to be the best approach for these new startup operations.

Dealers alike want to bring a wide variety of choices to their customers and are demanding the availability of all of the various wireless programs. As we have seen a recent drop in distributor discount rates (profit margins) on some of major prepaid wireless brands, less recognized MVNO brand products are starting to see more market penetration because of better discounts and rate plans being offered to market their brands.

With the market demanding a wider choice of products, prepaid distribution companies (especially those using POSA and electronic distribution) are far better positioned to bring on new competitive products and services through their distribution channels. With POSA and electronic distribution, dealers have 24/7 uninterrupted access to a wide variety of prepaid wireless programs making "31 flavors" a reality. In addition, with POSA, distributors and their dealers are not required to invest large amounts of working capital in inventory and are able to pay the MVNOs, in many cases, as the product is sold to the subscriber.

Partnering with large prepaid distribution networks utilizing POSA technology to deliver products to market presents a great advantage for startup retailers. These prepaid distribution companies can simply add the MVNO products to their system, thereby providing their agents and dealers with a greater choice of services to sell. Literally overnight an merchant retailer can be selling its prepaid wireless program to walk-in customers, thanks to POSA and electronic PIN distribution technology.

Merchant realizing ideas quickly and effectively is critical to success. In today's fast-paced world of evolving technologies and rapid globalization, nothing stays the same for very long. Innovators who embrace-and even drive-change in their businesses will be the winners in a world where business-as-usual is no longer a viable option.

Businesses must never stop innovating and continually add value to there business process to maintain & enahance the competitive position.

To continue to learn how to innovate your business for the wave of the future!.

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