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Disappointment in U.S. Mobile MVNO Market

Strategy Analytics has released a damning report on the current state of the U.S. Mobile Virtual Network Operator (MVNO) market which indicates that the majority of the virtual networks launched with such fanfare earlier over the past two years, will fail to make an impact on the marketplace.

MVNOs, such as Helio and Mobile ESPN, have not lived up to their marketing hype. Despite promising to shake up the market, they have only attracted miniscule customer numbers. In contrast, less glamorous MVNOs, Tracfone, Virgin, and Boost, aimed at the prepaid and youth market, have carved out a comfortable niche, which the trendy, high-tech newcomers can only enviously ogle.

Sara Harris, Senior Industry Analyst at Strategy Analytics, who wrote the report, comments, "The new wave of MVNOs has failed to learn lessons from its predecessors. The handsets are boring, pricing uninspired and the distribution strategy is flawed. This is a three-fold recipe for failure." At the end of 2005, Tracfone, Virgin and Boost accounted for 65 percent of the U.S. MVNO market.

David Kerr, Vice President of the Global Wireless Practice, notes, "Most MVNOs seem to have forgotten to recognize the digital youth segment's preference for prepaid service when planning these product, promotion and distribution strategies."

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