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January 17, 2005

Vonage MVNO?

By Nancy Gohring

This blogger admittedly is offering pure speculation, but it’s an interesting idea (scroll down to Jan. 14 entry): Apparently Vonage UK has appointed a new CEO whose name is not yet revealed. This blogger knows the chap and connecting the dots between the new CEO, the forthcoming Vonage Wi-Fi handset, and a leap into the future of combined GSM/Wi-Fi phones, he has drawn the conclusion that perhaps Vonage may be considering launching its own mobile virtual network operator. For those of you not familiar with the term, MVNO’s don’t own a cellular network but they buy air time from an operator and resell a branded service to end users. Vonage would be in a great position to try to sell cellular access to its existing customers, especially those who use the Wi-Fi handset and are already used to Vonage being a quasi-mobile operator.

In fact, a combined service from Vonage would be a very powerful offering that might make the existing cell phone and landline operators a bit nervous. Vonage customers could truly use a single handset both at home and out and about. At home, coverage wouldn’t be an issue like it is with cell phones in the house because users would attach to their Wi-Fi network, which presumably offers good coverage throughout their house. Once they leave the house, the cell network would take over, unless the user is in a hotspot that is compatible with the Vonage service. Vonage would own the relationship with the cell phone customer and it would be stealing voice minutes from the local incumbent. Even if the incumbent is offering the DSL that enables Vonage in the house, they will be offering a flat rate monthly access fee so they’d still be losing the voice minutes the customer would otherwise pay for on the phone.

Vonage would be positioned to beat anyone else to market with such a combined service. While some cellular devices that include Wi-Fi are being sold, few, if any, support voice over Wi-Fi. Some of the cell phone operators talk about combined services, but I suspect they’re too worried about canabalizing their cell networks that they’ll only launch the combined service as a last resort, namely to compete against the likes of a company like Vonage offering such a service.

Posted by nancyg at January 17, 2005 1:53 PM

Categories: voice

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