But while MVNOs are booming in Europe, some U.S. upstarts already have failed and others soon could follow suit. Despite investments ranging from $20 million to $300 million per company, many of the U.S. MVNOs have fewer customers than their counterparts in tiny European countries launched at a fraction of the cost. Analysts say that's because too many U.S. startups are trying to act like full-service operators instead of mimicking the business plan of a discount airline.
Such problems might be avoided if U.S. MVNOs took the same approach as their European counterparts, says Telmore founder Rasmussen. "You don't need to have shops and consultants," he says. "If you want to be competitive on customer service let people do things by themselves." With full-service operators, for instance, customers who want a copy of their bill typically call a service representative, who sends one out in the mail. But at MVNOs like BiBoB, subscribers fetch their own records over the Web and print them out themselves.
Using the Net to cut costs isn't the only thing that sets apart European MVNOs. Many use clever marketing tactics, such as distributing SIM cards (the chips that link a phone to a specific user account) through supermarkets and convenience stores. Telmore did something even wilder: It blew 60% of one year's marketing budget on a giant party for all of its customers, offering live music, draft beer, and free hot dogs. Rasmussen figures the 6,500 people who showed up became roving ambassadors for Telmore, helping it nab 250,000 new customers that year.
Are there other things (eg. different air interface standards in the US) that might be a factor?