CDMA2000 Operators Enable Wireless’ Next Big Opportunity

US : The CDMA Development Group (CDG) announced that the CDMA2000® industry in the U.S. is playing a key role in wireless’ next big opportunity: the $10 billion mobile virtual network operator (MVNO) market. This type of service provider targets specific demographics rather than traditional, broader categories such as consumers or business users. For example, Virgin Mobile USA caters to the youth market, while Movida Communications is focused on Hispanics. The common denominator is that the majority of MVNOs rely on CDMA2000 networks.

“By choosing CDMA2000 by a wide margin, MVNOs have sent a clear message about what matters: bandwidth, data, reliability and device selection,” said Perry LaForge, executive director of the CDG. “Regardless of whether an MVNO is targeting the entry-level prepaid or enterprise market, the CDMA2000 industry has a solution to fit every business plan and market.”

The MVNO market in the U.S. drove approximately $2 billion in revenue in 2005 and had 5.5 million customers, according to the analyst firm Ovum. By the end of the decade, the MVNO market could be worth $10 billion annually and have 25 million customers, Ovum estimates. Research firm Yankee Group expects the MVNO market in the U.S. to be worth $10.7 billion by 2010 with 29 million customers. According to a January 2006 survey by In-Stat, roughly 80 percent of existing and prospective cellular users said that they would consider buying service from an MVNO.

That’s a huge opportunity – one that CDMA2000 service providers and handset vendors are ideally positioned to capitalize on. Sprint enabled the first U.S. MVNO, Virgin Mobile USA in 2002, and today CDMA2000 operators have MVNO agreements with Amp’d Mobile, Disney Mobile, ESPN Mobile, HELIO, Movida Communications and Qwest Communications International. CDMA2000 has the spectral efficiency that allows an operator to ensure high quality of service for its customers, but still have enough bandwidth to serve the customers of its MVNO partners. In the case of Virgin Mobile USA, the MVNO added three million customers in its first 30 months – a growth rate that a CDMA2000 network could easily handle.

CDMA2000 is ideal for nearly any MVNO service, such as:

Data-centric MVNOs – CDMA2000 1xEV-DO supports peak data rates of 2.4 Mbps and average speeds of 400-800 kbps, so it is a natural fit for multimedia-intensive MVNOs such as Amp’d Mobile and ESPN Mobile. Verizon Wireless was the first nationwide operator in the U.S. to offer broadband wireless when it launched 1xEV-DO in 2003, and today it provides coverage to 150 million POPs throughout the country. Sprint Nextel launched 1xEV-DO in July last year, and has expanded the coverage to more than 141 major markets and more than 250 airports nationwide. With the upgrade to Revision A, both operators will be able to support data rates of up to 3.1 Mbps and offer advanced multimedia services.
Enterprise MVNOs – CDMA2000’s combination of bandwidth and reliability makes it ideal for business applications, which require high availability and throughput. CDMA2000 also has an impressive line-up of enterprise-class handsets, such as the Palm Treo 700 and the UTStarcom PPC-6700.
Youth MVNOs – Although many entry-level MVNOs cater to teenagers and young adults because those users often have limited budgets, these demographics also include users with more to spend. A new MVNO, HELIO, is targeting tech-savvy young adults in the U.S. who are willing to pay a premium for advanced devices and services such as multiplayer gaming. Scheduled to launch in spring 2006, HELIO is a joint venture between EarthLink and SK Telecom. Another example is Amp’d Mobile, which Laptop magazine says has “all of the right ingredients to make wireless data a must-have instead of an overpriced afterthought.”
“3G opens exciting possibilities for MNVOs that offer services beyond discount voice and SMS and for mobile operators to move into new markets,” said LaForge. “By being first to market with 3G and broadband, CDMA2000 operators are in a good position to capitalize on this opportunity.”

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