ELI5, why do phone services like T-Mobile have offshoots like Mint and Metro even though it’s basically the same service?
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A long time ago when landlines were new, you had Bell Systems that provided phone service. It was almost like a franchise where a different Bell provided different service to a different region of the US. But they were all purchased by ATT sometime around 1900. Many years later, the government decided ATT was a monopoly and forced them to split up. This is when ATT became long distance, and then local calls were handled by a baby Bell (I forget how many Bells there were, they provided regional service and all included several states).
ATT was split up because of the Sherman Antitrust Act. This was in the 1980s.
Fast forward to mobile phones and you see a similar progression. You had smaller companies take a piece of the market, and then they began to merge forming larger corporations with fewer opportunities for other corporations to get into the market.
This is when we started see Virtual network operators. The main mobile network operator would lease lines from their big companies so that the little companies wouldn’t have to build their own towers. They could either provide their own equipment to existing towers, or they could directly lease the line. This let other companies offer competition and kept the parent company out of hotwater.
But at some point, the US stopped caring about preventing monopolies. So now we’re seeing things like all the baby bells being brought back under the ATT corporation, and we are also seeing the successful virtual providers being bought up by the parent provider.
What are we going to do to stop them? Nothing. We have more important things to worry about right now, like people in drag reading at libraries.
Let’s say two bakeries, A and B dominate the baked goods market in a town. They both roughly cater to half they customers. They both sell similar goods like bagels, cinnamon rolls and donuts.
Now the guys at A get a clever idea one day, they will start a new pretend bakery C, using the same equipment, the same employees and the same cheap ingredients as their original A brand, the only difference is packaging, prices and maybe some changes in the assortment.
If they choose the branding carefully, bakery C will now attract only some of the original A’s customers, many of B’s customers and hopefully many new customers that normally would not consider A or B at all. If done correctly, suddenly the geniuses at Bakery A/C will have increased their market share from half to maybe two thirds without much extra cost. Also they have diversified their offering so it will be more robust when customers change their preferences in the future.
This is called segmentation, when you identify a group of customers and create an offering directly to that group. A typical example is labeling shampoo as “for men”. As men would not buy the pink shampoo bottle with rosy smell and “silky smooth skin” on the label, by simply pouring the same product into a black container with a new label and scent, suddenly the shampoo manufacturer can unlock a lot more sales for a low price.
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