Target this week confirmed earlier reports that it will launch an MVNO on T-Mobile’s network this weekend. The service, dubbed Brightspot, will offer unlimited voice and text for $35 a month as well as two plans including data at $50 and $65 a month. Data will be delivered via HSPA+ or LTE until the caps are reached, at which point users will be throttled down to 2G.
As my colleague Kevin Fitchard notes, Target is joining Wal-Mart in the ranks of retailer-cum-wireless services provider. But while that model is still pretty unusual in the U.S., it has gained momentum in some other markets — three of the largest U.K. grocers have launched their own MVNOs, for instance.
The market for discounted prepaid services via a traditional (read: cell-based) MVNO model is a cutthroat one where margins are very slim, however. So rather than focusing on creating a new revenue stream, most of the retailers wading into the MVNO waters view mobile as a way to create closer relationships with their users and increase customer stickiness. Target is aiming for that by giving Brightspot users a $25 gift card every six months they use the service, and they’re offering an additional 5 percent off for those who hold a Target credit card. Meanwhile, the retailer can constantly present its brand to users on their phones, and perhaps even glean some invaluable data regarding their mobile usage. Which is why I expect at least a few more big U.S. retailers to launch MVNOs in the next 18 months or so.