Wednesday, May 17, 2006

Cellular Carriers Eye Immigrant Population

TechNewsWorld writes that "startup cellular carriers are beginning to view the United States' immigrant population as an underserved market. Marina Amoroso at Yankee Group said, "Carriers have done a good job in penetrating most adult demographics, so they are now searching for niche groups that don't rely on their services."

The article states that with penetration "well past the 100 million mark in the U.S.," Mobile Virtual Network Operators (MVNOs), such as Movida Communications, PowerNet Global, TracPhone Wireless and Uphonia are "building businesses that cater to immigrants."

The article cites numbers from the Center for Immigration Studies, which "estimates that there are 33.1 million legal and illegal immigrants -- which equals 11.5 percent of the U.S. population -- in the country, and that number is increasing by 1.3 million each year."

Neil Strother at NPD Group said, "Immigrants want to keep in contact with relatives and friends that they left behind, and the easiest way to do that is by phone." The article then notes some of the problems immigrants face trying to establish phone service when they first arrive in the U.S.

David Chamberlain at In-Stat/MDR said, "Because they have no credit history, immigrants are unable to sign up for most cellular plans."

The MVNOs can get around these "problems by offering prepaid calling services." However the big question for MVNOs is whether they can "attract enough customers to be successful." Yankee Group's Amoroso said, "A few MVNOs have attracted a million or more users, but most have only a few hundred thousand customers."

One of the first targets is the Hispanic population, "which numbers about 40 million in the U.S." In-Stat's Chamberlain said, "Carriers have been focusing on places where there is a large number of immigrants, such as Texas, California and the Southwest."

One potential problem for targeting the immigrant population is that it's highly mobile. NPD Group's Strother said, "Immigrants tend to be more mobile than the rest of the population, so carriers may find it difficult to establish recurring revenue streams."

Chamberlain at In-Stat opined "I think only a couple of immigrant MVNOs will have large enough customer bases to remain in business long term." Amoroso added, "In cities like Los Angeles, we are seeing some interest in the Asian population."

Regarding attracting the attention of the major network operators, Strother said, "Carriers have done a very good job in figuring out how to market and support their services to different groups. If an MVNO segment becomes large, I expect established vendors to aggressively move into it."

Amoroso countered, "It's a little early to determine which MVNOs will be successful and which will not, but I expect at least a couple developing services targeted at immigrants to survive."