DiamondCluster Predicts That a Variety of Technology Vendors, Service Providers Will Vie to Bring Mega-Brands into the Wireless Market

CHICAGO, March 6 /PRNewswire/ -- Oprah, Google, Harley Davidson and other high-profile brands will soon have a greater opportunity to become Mobile Virtual Network Operators, according to "MVNO 3.0," a white paper released today by management consulting firm DiamondCluster International (NASDAQ: DTPI) .

ESPN is the latest high-profile entrant in the MVNO sweepstakes, but those ranks are expected to increase as a new breed of MVNO service providers, called Mobile Virtual Network Aggregators (MVNAs), emerge to provide other brands with complete solutions for launching branded wireless offerings.

"Just as big brands with large, loyal customer bases can offer credit cards without becoming banks, turn-key solutions from Mobile Virtual Network Aggregators will make introducing a wireless product technically and financially attractive for those brands that want to generate incremental revenue, promote existing services and boost customer loyalty," said Hamilton Sekino, a partner in DiamondCluster's Telecom practice.

"But unlike credit cards, wireless offerings enable companies to strengthen ties to their customers through consistent communication and to capitalize on the wireless craze. We've identified 90 brands who could be MVNO candidates. Imagine daily encouragements from your Dr. Phil cell phone or exercise tips from you Nike wireless device."

To request a complete copy of the DiamondCluster report, send an e-mail to: mvno3.0@diamondcluster.com.

MVNAs Will Help Power Wireless Growth

DiamondCluster projects that wireless will account for more than 50 percent of U.S. telecom customer spending by 2010, equivalent to a $170 billion market. Mobile data and video is expected to grow from about three percent to nine percent of U.S. telecom customer spending in that same timeframe, representing a market of $30 billion.

DiamondCluster expects MVNAs to power a portion of this growth in the mobile market. MVNAs will enable new players to enter the wireless market because they provide outsourced management of all levels of the wireless service delivery chain, short of branding and product distribution. This includes the network, back-office operations, the mobile data platform, handsets and the actual wireless offer (pricing, user interface and content and applications.)

"MVNAs will be positioned as the linchpin that connects all the key players and controls the essential levels of the wireless value chain," said Sekino. "They will provide a strategic and technical one-stop shop for brands that want to be wireless providers.

"But it is uncertain which companies will assume that role. Right now the field is wide open," Sekino added.

Competitors could include mobile operators such as Verizon, successful MVNOs such as Virgin, Mobile Virtual Network Enablers (MVNEs) such as Visage, and OEM handset manufacturers such as Motorola. However, each category of provider has certain structural or strategic shortcomings that could hamper their success.

"Wireless carriers, for example, might worry about cannibalizing their bottom line," Sekino said. "MVNEs are very strong at the lower levels of the delivery chain, but because they have little experience in development, customization, marketing and distribution, they will have to forge strategies alliances to be true aggregators. Handset manufacturers have a competitive edge because of their technical know-how but lack experience in launching and operating wireless companies and operating service businesses.

"But despite those barriers, the economics of serving as an aggregator are too attractive to ignore," Sekino said.

What will spell success in a crowded MVNA marketplace?

MVNAs will have to obtain flexible and competitive wholesale network lease agreements. They will have to deploy and integrate low-cost back-office systems and processes and acquire an advanced and flexible mobile data platform adaptable for multiple mega-brand clients. They must secure handsets at competitive prices that match each MVNO's distinct brand. They will also need to transform their clients' mobile visions into marketable, functional offers and provide back-up to their clients' marketing and distribution.

"In spite of the challenges, we believe there is enough interest from suppliers and demand from potential private label MVNOs for the MVNA model to emerge in 2006," said Sekino.

DiamondCluster International

DiamondCluster International (NASDAQ: DTPI) is a premier global management consulting firm that helps leading organizations develop and implement growth strategies, improve operations, and capitalize on technology. Mobilizing multidisciplinary teams from our highly skilled strategy, technology, and operations professionals worldwide, DiamondCluster works collaboratively with clients, unleashing the power within their own organizations to achieve sustainable business advantage. DiamondCluster is headquartered in Chicago, with offices across Europe, the Middle East, India and South America. To learn more visit http://www.diamondcluster.com/.

DiamondCluster brings deep telecom experience in telecom strategy and execution to support the launch of an MVNO, having collaborated with more than 50 wireless carriers and technology vendors around the world. The firm has helped launch 22 successful wireless operators worldwide. Those start-ups typically achieve market share that is 2x to 3x greater than expected based on international benchmarks.

  Contacts:
  David Moon
  Media Relations
  +1.312.255.4560
  david.moon@diamondcluster.com

  Laura Cinat
  Investor Relations
  +1.312.255.6167
  laura.cinat@diamondcluster.com