#DigitalSkeptic: Repackaging Makes Cell Service a Whole New Industry
NEW YORK (TheStreet) -- My buddy Tim Kridel is laying odds that wholesale change is coming to the wholesale wireless industry.
"It's the natural growth of everybody having a cellphone," explained Kridel, an independent wireless analyst who over the past decade has become my go-to source for sifting the signal from the white noise that is the cellular industry. What's sending waves through wireless, Kridel says, is a fascinating surge of third-parties injecting themselves strategically between cell operators and customers. These so-called virtual operators buy up voice, data and other services at wholesale prices from carriers, then repackage and resell them as targeted wireless products aimed at specific consumer niches.
"Even someone like Amazon is essentially a virtual operator that wholesales cell access for its Kindle," he said. "The idea has never been more popular."
All investors need do to get a feel for Kridel's "get-it-at-wholesale" cellular vibe is pay a quick call to any one of the number of sophisticated online wholesale wireless sales portals hosted by major American carriers such as AT&T (T), Verizon (VZ) and Sprint (S). There in plain Webish is essentially every part and parcel of the once-inviolate American wireless infrastructure -- from bulk access to advanced services such as billing and customer management -- laid bare for anybody with the coin to pay."Carriers are becoming very comfortable with partnering with others to target markets they can't effectively reach," said Karen Freitag, vice president for global sales at Sprint. "Could we gear up and serve a specific niche like military veterans and their families, sure we could. But could we really offer better service than passionate ex-veterans that know exactly what a soldier is looking for in a cellphone? There is no shame in saying, I don't think so. That's why we work with an operation like Defense Mobile. They offer a terrific cell product."
Investors need to understand that players such as New York-based Defense Mobile are far from a wireless oddity. Matt Ablott, senior marketing and communications manager for GSMA Intelligence, a London wireless research firm, estimated for me that there about 125 total mobile virtual network operators similar to Defense Mobile in the United States. All which combine to serve roughly 30 million users, or about 20% of the 150 smartphones in the U.S.
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