NEW YORK (WiMAX Day). Last week, Virgin Mobile USA, Inc filed a Form S-1 IPO prospectus with the US Securities and Exchange Commission (SEC). The document details the basic operation and accounts of a mobile virtual network operator (MVNO).

On page eight of the document, the “Risk Factors” related to an investment in the company are presented. Therein, some clever lawyers at Simpson Thacher & Bartlett LLP, and Skadden, Arps, Slate, Meagher & Flom LLP (listed on the cover page of the Virgin prospectus) have done their homework and concluded that WiMAX is a significant competitive threat to Virgin:

“We also may face competition from providers of an emerging technology known as Worldwide Interoperability for Microwave Access, or WiMAX, which is capable of supporting wireless transmissions suitable for future mobility applications as well as devices offering voice over Internet protocol, or VoIP, [and] telecommunication services in conjunction with WiFi technology.”

The acknowledgement of a competitive threat from WiMAX, which is also re-stated on page 88 of the document, offers a glimpse at the reality inside a mobile operator that does not have a WiMAX license. The competitive threat of WiMAX is now so great that it warrants notice amongst other risk factors one would think far more onerous.

MVNO seeks WVNO
What is even more curious about the competitive note is that the final sentence states that Virgin does not “have any agreements in place that would give us access to these emerging technologies.”

This is a curious statement. Virgin Mobile USA Inc is jointly owned by Sprint Nextel, and Virgin uses the Sprint network to offer its services as an MVNO. One would think that the relationship with Sprint might provide Virgin full access to its future WiMAX network. Moreover, the profile of Virgin Mobile subscribers in America could prove very desirable for Sprint’s WiMAX network.

According to the S-1 document, Virgin had some 4.5 million subscribers in America, as of December 2006. It further notes that its “target customers are early adopters of new technologies and use mobile data services at rates higher than those of the average wireless customer. In 2006, non-voice services represented 17% of [its] revenue, approximately 5 percentage points higher than the wireless industry average of 12%, according to the Yankee Group.”

If the lack of a WiMAX license is now a key cause for concern for mobile operators, perhaps it presents an opportunity for WiMAX operators to provide virtual network services. WVNO networks are being planned in Europe, and it’s conceivable that a few of the large spectrum holders in America could help ease the competitive concerns of Virgin and its lawyers.