The Dish Network acquisition of Republic Wireless, adding about 200,000 mobile virtual network operator accounts, illustrates a few points about the mobility business. First, scale matters, and is hard to amass, once the market structure has largely been formed. Compared to Verizon, with 42 percent share of postpaid accounts, AT&T with 27 percent and T-Mobile at 29 percent, for a total of 98 percent of the installed base, there simply is not room for other providers.
You might argue that mobile virtual network operators have tended to do better in the prepaid segments of the market, but even that niche has dwindled. In either postpaid or prepaid segments of the market, all the other providers have combined installed base share of two percent, assuming cable operators have two percent.
That assumes T-Mobile has largely shed its MVNO customer base as part of the merger with Sprint, leaving AT&T and Verizon as the carriers supporting the rest of the MVNO industry.
The other angle is that Republic Wireless was among a few MVNOs that tried to leverage “Wi-Fi first” as the connectivity model. Republic customer devices looked for a Wi-Fi signal as the primary connection, defaulting to mobile access only if an adequate Wi-Fi signal was not found.
That is less distinctive these days as most customer devices switch to Wi-Fi when indoors. The point is that Republic’s innovation could not be leveraged for share gains when all the leading providers simply matched the functional approach.
Sometimes sustainable innovation requires action by a leading provider, as a small upstart simply cannot amass the scale required to drive the change.
The other observation is that as the U.S. mobile market has become saturated, subscriber growth has necessarily turned to originally less-attractive segments of the market. Though postpaid accounts are favored, prepaid accounts represented the few areas where growth by acquisition still remained possible.
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