Meet GSM Nation, an MVNO selling any smartphone you desire

GSM Nation has spent the last two years selling unlocked smartphones through its online retail portal, and in the process has steered tens of thousands of clients toward contract-free voice and data plans offered by the newly emerging class of mobile virtual network operators. GSM Nation CEO and co-founder, Ahmed Khattak, but, is getting tired of handing off the potentially lucrative service business. So this fall GSM Nation plans to launch its own MVNO.

"No other MVNO has these types of relationships," Khattak said. Typically an MVNO will source a handful of new or refurbished smartphones from manufacturers or resellers, however for high-end devices like the iPhone they only supply SIM cards and rely on the customer to bring their own handset, he added. "We will be the first MVNO to sell high-end unlocked handsets straight from the manufacturer," Khattak said.

GSM Nation has decided to partner with T-Mobile, tapping into the operator's high-bandwidth HSPA+ networks and possibly even its future LTE (Long Term Evolution, latest standard in the mobile network technology) network. Those data speeds are of particular importance to the company because it plans to target more sophisticated users who live for their data services and spend relatively little time talking on their phones.

Khattak said GSM Nation's cheapest plan will run about $33 and include approximately 250 voice minutes and 2 GB of data. Clients will be able to buy bigger buckets of data and even a actually unlimited plan at higher tier plans. They can purchase more minutes, as then, nevertheless Khattak believes those voice-centric clients will be the minority. "Smartphone users are already migrating their voice use to Skype and other VoIP (Voice over Internet Protocol) services," he said. "I doubt there will be that much demand.”

Small operation

GSN Nation is a small operation. It brought in about $35 million in earnings last year primarily from business clients, Khattak said. Nevertheless the costs of creating an MVNO aren't huge. GSM Nation is funding its new venture from the profits of its retail business and $700,000 in seed funding, $200,000 of which came from Khattak's dentist.

It may not be a big company, however its ambitions are. Khattak said he and co-founder Junaid Shams created the company with the idea of replicating in the U.S. the mobile retail model of Europe, where most clients don't buy their phones from their carriers. Khattak finds the idea of phone subsidies abhorrent, not only because they lock clients into long-term contracts, yet also because they come part and parcel will higher plan rates, which ultimately cost clients far more than they save on the initial phone discount.

The same place Europe is in

"In five to six years we're going to be in the same place Europe is in," Khattak said. "We'll be buying our phones and SIM cards separately.”

With the MVNO's launch, GSM Nation will, clearly, prioritize its own mobile plans over its competitors, nevertheless Khattak said it will keep some separation between the MVNO and retail businesses. Clients can buy an unlocked smartphone and leave, taking their device to whatever carrier they chose. GSM Nation will as well sell straight up SIM cards to any customer bringing their own device. To tell the truth, Khattak hopes to see a lot of former AT&T clients bring their newly unlocked iPhones to his company.

For now, GSM Nation will continue sending business to AT&T MVNOs like Red Pocket and H2O Wireless for the simple reason it has to. T-Mobile is in the middle of a large-scale network conversion, which, once complete, will plant its HSPA+ network firmly in the PCS band. The transition is gradual, starting with an initial upgrade of 2500 cell sites in July, nevertheless by the time GSM Nation launches this fall, a good deal of T-Mobile's 3G network will however be off limits to most smartphones –including the iPhone.

GSM Nation plans to solve that problem in some cases by focusing at first on its stock of pentaband phones just as the Samsung Galaxy Nexus that can work on any GSM operator’s 3G network as then as the smaller set of T-Mobile optimized quad-band phones just as the HTC One S. For clients who buy an iPhone or any other smartphone that doesn't support T-Mobile's Advanced Wireless services airwaves, GSM Nation will advise them in which markets they will be able to receive a 3G signal, steering them toward an AT&T MVNO if they’re outside of coverage. The process may be a bit awkward, nevertheless it will only be temporary. T-Mobile will likely complete the PCS conversion long previously it launches its new LTE network in 2013.