CE Dealers Seen Becoming MVNOs

By Joseph Palenchar On Feb 13 2006 - 8:00am

Major retailers will join convenience store giants 7-Eleven and Circle K in offering house-brand cellular phones and service to improve their cellular profitability, leverage their brands and integrate phone usage into existing loyalty programs, according to Versent Mobile.

Versent is a new division of DBS Communications, which launched its own Mobile Virtual Network Operator (MVNO) service in 1998 under the EZ Link prepaid brand. DBS also enabled FireFly to bundle its kids-oriented FireFly phone with FireFly-brand service.

Versent bills itself as a virtual mobile network enabler (MVNE), a company with the back-office infrastructure and manpower to put other companies — or people whose names are a brand — in the cellular-service business on a turnkey basis.

In recent years, companies such as Virgin Mobile, Amp'd Mobile and ESPN have begun offering their own brand of phones and service without owning and operating a cellular network. Later this year, contends Versent senior VP Scott Merkle, major retailers will begin offering their own brand of service with off-the-shelf prepaid phones and prepaid phone cards.

For MVNO/retailers, Versent will provide provisioned Nokia and Motorola phones activated on the Sprint and Cingular networks through such logistics companies as Brightpoint, Brightstar and Pinnacle. The logistics companies package the phones, program them and handle returns.

Dealers will make handset and prepaid-card margins that will deliver more profits than carrier phones and service, given carriers' declining activation commissions, contends Versent COO Laren Whiddon. Dealers won't get an activation commission or residuals , simplifying their accounting.

The Versent relationship will make it possible for MVNO dealers to do something that traditional carriers don't do for dealers: integrate phone use with a dealer loyalty programs, Merkle said. Dealers will also benefit from repeat traffic when consumers return to buy additional prepaid cards, he added.

Versent will also offer hybrid prepaid/postpaid service, which is secured by a credit card but, like traditional postpaid service, doesn't require a contract commitment, Merkle said.

Besides enabling grab-and-go service, Versent will also enable "high-touch one-on-one selling" for dealers, who would use a Web browser interface to activate a customer's service, he added. In either model, retailers can do their own customer care or outsource it to Versent.

Versent will also team with dealers who want to offer traditional postpaid service, Merkle said, but Versent won't do credit scoring, monthly billing or collections, although retailers could link with a third party to perform those functions.

The MVNO service operated by parent DBS boasts 120,000 users. DBS's EZ Link service is sold through 3,000 storefronts in inner-city areas.