Virgin Mobile gets the iPhone -- is the wireless oligopoly starting to fade?

AT&T has articulated its vision of a concentrated wireless market with few carriers that control a lot of spectrum. They foresee a gradual, controlled shift from voice minutes to all-data during the next few years, and hope to charge enough for that data to maintain carrier revenue and profit.

But one of those carriers, Sprint, seems to be doing something radical -- competing.

Sprint is competing by partnering with mobile virtual network operators (MVNOs) that sell access to the Sprint network. Users have to buy their phones up front, without subsidy, but they get flexible, cheap voice and data plans in return. The MVNO gets less revenue per user than AT&T or Verizon charge, but I assmue they and Sprint are profiting or they would not do it.

The net result is that wireless is cheaper and customer bills more accurately reflect the fact that voice calls, text messages and data are all bits.

Since the user pays full price for a phone, the MVNOs do not require two year contracts, but they lock you in by insisting that you buy your phone from them -- you cannot bring your own. Phone portability should improve with market pressure and the widespread adoption of fourth generation cellular technology.

MVNO phone selection is limited, but that may be breaking down. Sprint recently picked up the iPhone and today they announced that Virgin Mobile, one of their MVNOs, would also get the iPhone. I suspect that eventually Sprint MVNOs will offer all Sprint phones.

Virgin is not Sprint's only MVNO. One, Ting, has effectively done away with the concept of tiered service -- you pay for what you use. Virgin and Ting are early, but there will be others. One that is in beta, Republic Wireless, hopes to charge even less by automatically substituting WiFi for cellular connectivity whenever possible.

AT&T has their ideal vision of the future, and I have mine -- the ability to own my own phone, use it on anyone's network and only pay for the bits I send and receive.

Wishful thinking -- might Ting, Virgin America and T-mobile trigger wireless competition?

Ting pricing example, click to read

Speaking on a panel at the Geek Wire Summit in Seattle, T-Mobile Chief Marketing Officer Cole Brodman said that bundling subsidized mobile phones “distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields.” He went on to say that if he were "king for a day," he would do away with subsidized phones.

When asked why T-Mobile did not do it, he said that consumers are used to low phone prices and would not switch even if the long run cost, including usage contact rates, were less.

Well, he may be right, but ting.com is betting that if an unbundled plan is cheap and flexible enough, people will be willing to pay big bucks up front for a phone. How does, say, $62 per month for 2 phones, 500 voice minutes, 1,000 text messages and a 2 gigs of data sound to you? That is a tentative plan I priced out using Ting's rate calculator (see the image above).

But wait, it gets better. There is no contract -- service is month to month. How about their rate plans? There are 216 possibilities. Want more? Ting doesn't roll unused minutes and data over, it gives you cash credit on next month's bill if your actual use is below your plan. What if you exceed the limits of your rate plan? The rate plan is tentative, not hard and fast -- you are bumped up to the next level with not penalty charges. In other words, your bill is a function of your actual usage, not your plan.

It's not all rosy. The phones aren't cheap. For example, a Samsung Galaxy SII 4G is $465, but Ting's billing plans and rates can make up for a lost phone subsidy pretty quickly and you won't be tempted to throw away your phone every two years. For the time being, Ting offers only a few phones and you can't bring your own -- you must buy one of theirs. Another possible glitch -- Ting's carrier is Sprint, and they might have poor coverage in your area.

Virgin Mobile has launched an ad campaign for their unlimited data service. For $35 a month you get 300 minutes of voice and unlimited 3G data and messaging with no contract. Like Ting, they are on the Sprint network in the US, but their 3G phone selection is less impressive.

Might Ting and Virgin Mobile disrupt the mobile phone market? Maybe T-Mobile will jump on the bandwagon. Might we eventually see competition in the mobile market? Stay tuned.