MobileX Seeks to Disrupt “Fat and Happy” US Telecom Market

Earlier this year, a new mobile virtual network operator (MVNO) broke rank in the US with a unique feature that caught my eye.

MobileX says it uses artificial intelligence (AI) and cloud tech to predict how much data customers need each month, and then only charges them for that amount (see Figure 1). It claims to offer the most precise bills in the industry, using an app that quickly learns about people’s data habits.

The result could lead to a reduction in phone bills in a country where customers are used to sky-high prices. Last week, I caught up with CEO Peter Adderton to learn more.

Mr Adderton has a wealth of MVNO experience. He was one of the founders of Boost Mobile, which launched in Australia in 2000. He later brought the brand to the US before selling to Nextel. And he’s clearly set on shaking things up now. “I want to disrupt an industry that is fat and happy,” he told me, before launching into a tirade at rivals’ unlimited data plans and overage charges.

Migrating customers to higher-priced bundles is an important strategy for the big US carriers. But Mr Adderton says their model is centred on selling data people simply don’t need. He added that most customers don’t know how much data they use and are scared into taking unlimited plans for fear of out-of-bundle charges. We want to “un-brainwash the brainwashed,” he declared, likening rivals’ approach to the insurance market, where average customers effectively subsidize the heaviest users.

Mr Adderton declared that most unlimited offers on the market are “fake”, as they include speed caps and other restrictions. MobileX does offer unlimited data for those who want it, with two plans priced at $20 or $25 per month. But one of MobileX’s main features is that any unused data is credited back to customers’ accounts, or just rolled over to the next month.

When I challenged Mr Adderton as to whether MobileX’s technology is genuine AI or just a clever algorithm, he assured me it’s the former. He said the carrier has its own data scientists working on AI, as well as a deep integration with its wireless partner, Verizon. But he added that most people’s usage patterns are predictable and vary little from month to month.

For the first 10 days, customers can use MobileX for free as it learns about a subscriber’s behaviour before making recommendations. After that period, Mr Adderton claims its estimations are 95% accurate.

Figure 1. Example of MobileX’s AI data forecast service.

Source: Peter Adderton, Twitter

The CEO is also on a mission to eliminate costly roaming fees. He pointed out that international travellers must pay for both their US plan and pricy add-ons when using their phone abroad.

MobileX also plans to offer a speed optimizer, giving customers a temporary boost to performance, which they might need in crowded places like stadiums. It’s all part of a drive to give people more control over the service they want to receive.

Initially, MobileX is only being offered online, but there are plans to work closely with dealers and expand the offering to retail stores. The service is available through e-SIM or a physical SIM card.

One comment from our conversation really struck me. Contrary to most industry forecasts, Mr Adderton sees average mobile data usage falling, not rising. He pointed to the growing trend of watching short-form videos, and described how MobileX customers can reduce the video resolution on their smartphone to limit data use.

The CEO is also plotting to bring the concept to European markets, including the UK, and is in discussions with several global operators. In Europe, mobile tariffs are much lower than in the US and the concept of unlimited data is less established, so it may not be as effective. But existing providers should still be aware.

If it gains steam, MobileX could become quite disruptive; it’ll be interesting to see if it provokes any response from rivals. But the path ahead won’t be easy — undercutting the market means the MVNO will need to keep a tight lid on costs. And as a new brand, it’ll need a major marketing effort to raise awareness. Its chances will also depend heavily on a successful partnership with Verizon and the smooth technical deployment of its own platform.

But it’s great to see some rare innovation in mobile services. I applaud its ambition and will be tracking its progress with interest.