Embarq has decided that its wireless partnership with former corporate parent Sprint is no longer attractive. Embarq was hoping to gain 1 million wireless customers and has only achieved 112K to date. They’ve essentially decided to let the wireless business “die.” They’ll continue selling devices and plans until everything runs out, and then shut the business down. Existing wireless customers will probably migrate over to Sprint. The move isn’t an encouraging one for the MVNO model, at least as it applies to large carriers like Embarq. When hearing news like this, it’s easy to dismiss the MVNO model entirely, but I’m not ready to do that yet. It’s also bad news for Sprint, at least from a PR point of view. Embarq joins Qwest in ditching Sprint as a wireless partner. Sprint’s MVNO business has suffered highly visible partnership failures, including Qwest, Pivot Wireless, and now Embarq. To be fair, probably the most successful North American MVNO play, Virgin Mobile, is also affiliated with Sprint.
While the Sprint MVNO model hasn’t worked for Embarq, for many smaller ILEC’s, the MVNO model is the only game in town, provided a pure play ILEC wants to get in the wireless business. It’s a difficult business to crack. The ILEC partner, particularly small ones, are at the mercy of the larger wireless carriers, and are usually low on the totem poll in priority. Finding the right business model, where both wireline and wireless partner can prosper to their respective expectations has proven to be elusive. Yet, it’s still too early to give up. Wireline carriers recognize that the future of the business lies in wireless and broadband, not in wireline voice. Most ILECs have the broadband part covered. Those who want to also hedge their bets with wireless need to find an MVNO model that works. Early indications suggest that wireless can help maintain competitiveness. AT&T and Verizon are only beginning to maximize their competitive advantage with wireless, and their future looks promising. Recent news also suggests that the cable industry intends to find the right wireless strategy as well. So while MVNOs are taking a lot of heat of late, there could and should still be a positive future with them, provided those who are interested work to persevere and find a winning business model. Good luck!