Companies Look to Broaden Brand Identity With Cellular Services

TechNewsWorld writes about increased branding efforts taking place in the cellular services market. David Chamberlain at In-Stat said, "Many firms view offering cellular services as a way to increase brand awareness and customer loyalty." Companies are looking to add "cellular services to their repertoire" because of "the continued growth in the use of wireless services -- there are now more individuals using wireless services than wired ones in the United States."

Neil Strother at The NPD Group said, "Cellular services appeal to young adults, those in the 18-25 age range, and that is a group that advertisers want to reach."

Some of the companies jumping in via the MVNO route are Disney, Virgin and ESPN. Ira Brodsky at Datacomm Research said, "Companies need to look at the MVNO market as a long-term commitment and not expect a positive cash flow for at least three years."

Getting into the market and building the brand is a significant challenge with estimates are companies having "to spend from US$25 million to $50 million in order to have a chance for success."

MVNOs piggyback on top of the carriers' networks and cannibalizing the customer base is a concern. In-Stat's Chamberlain noted "In Europe, T-Mobile signed a deal with Virgin that did not make a lot of financial sense, and it seems like all of the cellular carriers learned from that mistake. I don't think MVNOs should compete on price. Their strength is possession of well known brand, one customers will pay to be associated with it, so they should charge extra for it."

ESPN is one company taking this path and Chamberlain added, "By the end of the year, I expect about a dozen companies to be offering these services."