Originally posted on StartU.
Wireless Telecommunications Industry Overview
The US Wireless carrier market is a $280Bn market, and according to IBISWorld, the top three major players (Verizon, AT&T, and T-Mobile) account for 67.8% of industry revenue. Even with the high concentration in the industry, the major providers still have network capacity that they’d like to sell. However, customer acquisition costs are high and many of the remaining potential subscribers are not willing or able to pay the plan prices that major network providers offer.
That’s where resellers come into play. Resellers purchase wireless telecommunications capacity from larger operators at wholesale prices and resell that capacity to targeted markets, such as small businesses or individual consumers, at a lower price point under their own brand. These wholesale ‘reseller’ contracts enable major providers to earn extra revenue on excess wireless capacity by capturing customers that would have otherwise used a prepaid service, a win-win scenario for both major network providers and resellers.
Connected Mobile Background
When Andie Kaplan arrived at Wharton, she was inundated with messages from international students trying to join the family wireless plans of domestic students. Many wireless plans were inaccessible to international students because they lacked both an established credit history in the US and a Social Security number. Even for those who could sign up for service, opening just one line of unlimited service would cost them upwards of $60/month per line vs about $35/month per line on a family plan.
Andie realized the problem international students dealt with and used her first-semester entrepreneurship class as an opportunity to further validate this problem. She discovered that in addition to the high prices of a single line, international students were frustrated with the complex coordination associated with joining family lines and splitting those payments thereafter. After three months of interviewing international students, Andie decided to single-handedly address this problem, and thus, Connected Mobile was born.
For Connected Mobile to provide service, Andie needed to land a ‘reseller’ contract with a major provider. Andie started by attending a T-Mobile employer session where she connected with every representative and expressed interest in obtaining a contract. Andie pitched the value that Connected Mobile could bring to T-Mobile by targeting the 1.1M international students that would otherwise purchase a prepaid plan or join someone’s family plan. After six months of following up with contacts and chasing new leads within T-Mobile’s organization, Andie finally obtained a contract and was able to bring Connected Mobile to the public one month after closing. The initial launch focused on students at the University of Pennsylvania, but word spread quickly and within three months, Connected Mobile was serving students across 25 universities.
The Service — How It Works
Connected Mobile is uniquely built with international students in mind, by allowing customers to sign up for plans without credit checks. After a customer creates an account, Connected Mobile ships a SIM card to the customer at no additional cost. A customer simply needs their own mobile device to start using a plan.
Connected Mobile’s plans start at just $22.99 per month, 50% lower on average than the prices for equivalent plans at leading wireless providers. How are they able to provide such low prices? Connected Mobile benefits from having great word-of-mouth marketing and organic growth through student channels such as clubs, resulting in low customer acquisition costs. On top of that, Connected Mobile leverages T-Mobile’s existing infrastructure without bearing the costs of building and maintaining the network. So, while conventional wireless carriers spend upwards of $300 to acquire a subscriber, Connected Mobile spends a fraction of that and passes cost savings on to their subscribers.
Of course, there are MVNO (mobile virtual network operator) plans, such as Mint Mobile or Straight Talk Wireless, that offer more competitive prices. But Connected Mobile differentiates themselves from these players by offering features such as 10GB of mobile hotspot data, free international data, and the ability to freeze lines. Additionally, unlike these MVNO providers, Connected Mobile is on T-Mobile’s postpaid network, meaning their customers get better coverage with domestic roaming and no data de-prioritization.
Recent Pivot & Experience Overhaul
COVID-19 has shrunk the international student population for many universities compared to that in prior years, as a significant number of international students enrolled at US programs are currently learning remotely outside of the US given a combination of travel restrictions and university shifts to online learning. In response to this disruption in their core customer base, Connected Mobile introduced the ability for subscribers to freeze lines for just $10/month. Connected Mobile soon expanded their line freeze offering to international students on any wireless carrier’s plan to help them avoid paying upwards of $50 a month for their existing US plans.
“We saw a 13% increase in lines from international students transferring over to us for this offer, and we expect these students to remain as customers upon their return to the U.S,” says Kaplan.
Connected Mobile also used this time to overhaul the user experience by bringing on CTO and co-founder Alfonso Garza. In just one month, Alfonso rebuilt Connected Mobile’s back end, implementing a new billing system and automating the phone activation process.
Connected Mobile has bootstrapped their way to acquiring subscribers across 40 universities in the US. While Andie plans to continue to expand Connected Mobile’s presence on campuses, Connected Mobile is open to anyone and their subscriber base is growing off campus as well. In fact, their 10GB hotspot has quickly made them the provider of choice for many RV enthusiasts, a market that has seen significant growth since quarantine began. While acquiring customers outside of their student market is great, Andie recognizes that new growth has to align with their low customer acquisition cost strategy, “At the end of the day, our plans are an incredible value, and we want to be able to help anyone who’s interested. Moving forward, we’re focused on how we can get the word out about Connected Mobile in an efficient way.”
Connected Mobile is available across the US and plans are open to anyone. You can find more information about Connected Mobile here.