I was recently made aware of a new company called Solavei that has launched in the mobile service arena.
One of the primary things that make this company unique is the way in which its service is being marketed. They are basically using a Network Marketing model (also known as Multi-Level Marketing or MLM), with an emphasis on web-based social sharing.
Since it’s being pitched as an income opportunity, and largely a web-based one, I decided it would be fitting to do a review of it. I wanted to do some research to determine if it was an opportunity I would be interested in getting involved in, and at the same time I figured it would be nice to share my findings so others can learn more about it.
Normally, I wouldn’t even consider joining an MLM, but I figured this one was at least worth looking into due to the nature of its product (mobile service) and its potential to integrate with my existing Internet marketing business. I really don’t want or need to add this to my business, and I’m generally not keen on MLM’s, but I’d hate to miss out on a great opportunity. So I’ve set out to be as fair and balanced as possible, for my own benefit, and yours.
Let’s start with the basics…
What is Solavei?
According to their website, “Solavei is a better way to get mobile service at a great price – plus the opportunity to earn when you share.”
Pretty vague, right?
My first thought when I heard about this new mobile service, was how could they possibly compete with the big four networks (AT&T, Sprint, T-Mobile, Verizon)? How could they manage to build a new 4G network, when I don’t even have 3G available at my house yet?
It took just a couple minutes of digging to discover that Solavei isn’t building a network, but is actually a mobile virtual network operator (MVNO).
According to Solavei, this means that they entered into “a strategic partnership with T-Mobile USA.” If you want to learn the nitty-gritty about MVNO’s, you can check out the Wikipedia article linked above.
In simple Internet Marketer terms, this basically means they are a reseller of T-Mobile’s services.
I’ve got no problem with that. I’ve been a reseller of various product and services like web hosting, SEO, and list management.
In many cases, the reseller business model can be a win-win-win. The original service provider wins by selling more of their service. The reseller wins by building a business and making money as a result of their sales. The customer wins by getting a better price.
You might wonder, how could the reseller offer a better price than the original service provider? The answer is that the service provider sells their service in bulk at a discount to the reseller. The reseller then divides that product/service into individual units and sells it at a price that beats the service provider’s direct-to-consumer price, while yielding a profit for the reseller.
In the case of a web hosting reseller, the reseller may rent a web server (or a portion of a web server) from the web hosting company. The reseller would then divide those resources into individual packages, and sell web hosting to end-users for a price that may beat the top level web host.
In the case of MVNO’s such as Solavei, they are buying bulk access to network services from network owners, such as T-Mobile. They are then selling access to those network services to end-users for a price that may be favorable compared to say, subscribing directly with T-Mobile.
There may also be some drawbacks to purchasing through a reseller…
While the above examples illustrate the potential for consumers to save money by purchasing from a reseller, that’s not always the case. To the contrary, reseller prices are often more expensive.
A reseller of any type is essentially a middle-man. They make their profits by marking up the price above their acquisition costs. In many situations, this results in prices that are higher than the consumer would be paying had they cut out the middle-man.
The other main area of concern is often customer service. While not always the case, resellers are often responsible for interfacing with and taking care of their customers. In some cases, this may result in a superior experience for the consumer, as the reseller may be able to provide more personal and customized service than the top level provider.
However, resellers may also be less-equipped to handle customer service, and may run into problems particularly when technical issues arise. Since an MVNO doesn’t own the network itself, they may rely on the network owner to fix technical issues, and thus the MVNO’s support department is acting as an intermediary between the end-users and the network.
Keep in mind I’m speaking in general terms here, as I am not a user of Solavei’s service, so I can’t judge their customer service one way or the other.
How does Solavei’s mobile service compare?
As I’ve already mentioned, Solavei’s wireless services are hosted by the T-Mobile USA network. So if you’re familiar with T-Mobile, you’re familiar with Solavei’s quality of service. This does not mean that the services or packages are identical, but the network infrastructure is the same, so I would expect the quality to be similar.
While Solavei touts themselves as being groundbreakingly new (apparently due to their marketing model), MVNO’s have actually been around for a long time. According to Wikipedia, there are currently 633 MVNO operations worldwide.
I wasn’t aware of it until researching for this article, but I was actually a subscriber of an MVNO at one time. Apparently Qwest Wireless was an MVNO with service from Sprint. My experience with that mobile service was not a particularly good one.
I also have some first-hand experience with T-Mobile, having been a subscriber for several years. I was typically very happy with their service, and really didn’t have any problems with it until I moved out into the hills. The T-Mobile coverage is spotty out here, so I switched over to AT&T. If it weren’t for that fact, I would probably still be with T-Mobile.
You can check the coverage on Solavei’s website.
Here is their coverage map…
Make sure you zoom in as close as possible to your house. From a distance it may look like there is good coverage, but as you zoom in closer there may be holes.
Here is the coverage map showing my neighborhood…
My house is in the yellow zone, which is 2G only. If it were solid uninterrupted 2G, that might actually work for me, but in my experience with T-Mobile it was still pretty sketchy. If they were to upgrade the network and put me in the dark-green or at least medium-green zone, I’d likely be switching over.
According to Solavei’s website, I could even bring my iPhone over to their service. They have the option of bringing your existing phone (many are compatible… you can check it on their site), or buying a new one from them.
So as far as the service goes, it really just depends on the strength of the T-Mobile network in your area.
How does Solavei’s price compare?
If you look solely at Solavei’s comparison chart, you would believe that they were leaps and bounds ahead of most of the competition…
Indeed, their price easily beats the big four providers. Solevei’s package is $49/month for unlimited voice, text, and data. Comparable packages with the big four cost anywhere from $70/month (T-Mobile) to $109.99/month (AT&T and Sprint).
The other providers are listed on the comparison chart are actually MVNO’s too, with the exception of Cricket, which is owned by Leap. Leap has its own network, but they also have a deal to provide 3G service through Sprint’s network, so they’re kind of like an MVNO too.
StraightTalk (aka TracFone) ($45/mo) has deals with all four of the big networks. Walmart Family Mobile ($45/mo) utilizes the T-Mobile network, while Boost Mobile ($55/mo) and Virgin Mobile USA ($55/mo) are both hosted by the Sprint network.
So right there, we can see that the MVNO’s prices in general beat the actual carriers. But is Solavei the best of the MVNO’s?
After analyzing the MVNO’s listed above, as well as many others (all US based services), I’ve come to the conclusion that Solavei’s price is at least on par with the others, and beats them when all factors are considered (particularly the 4G network).
One area where Solavei is lacking is a selection of plans. Whereas most providers have a variety of plans available, Solavei currently only has one. So if you’re looking for an “unlimited” plan, Solavei is about at cheap as you’ll find. But if you don’t need that many minutes and/or data, you may be able to find a cheaper plan elsewhere.
For example, Simple Mobile (hosted by T-Mobile) is currently offering a plan starting at $25/month with NO data. But their plan most comparable to Solavei’s would run you $50/month.
I-wireless (hosted by Sprint) has a plan for $25/month including 200 minutes of talk time, and a mere 200MB of data, if that’s all you need. Their plan most comparable to Solavei’s would run you $75/month.
Net10 (Multiple carriers) has some smaller incremental plans available, but again you’ll be paying at least $50/month for unlimited data. I found similar situations with Black Wireless (hosted by AT&T), Ultra Mobile (hosted by T-Mobile) and other MVNO’s as well. Smaller plans are available, but you’re going to be paying at least $50/month (and in many cases much more) for unlimited data.
I did not do an exhaustive search of all of the hundreds of MVNO’s, but out of the dozens that I checked out, the only providers I found with a potential price advantage over Solavei were Boost Mobile and Votel Mobile (both on the Sprint network). Boost offers an unlimited plan for $50/month, but also includes a “shrinking payment” feature, which allows your monthly payment to gradually shrink as low as $35/month if you make 18 payments on time. Votel offers unlimited plans as low as $33.33/month (pre-paid for 3 months at a time) or $43.33/month if you have an Android phone.
However, Solavei beats all of the above if you consider the 4G network. The low-priced Sprint providers are offering 3G data plans, whereas Solavei includes up to 4GB of data on the 4G network each month. So if you live in a place where T-Mobile’s 4G network IS available, Solavei is the clear winner at this time.
If Solavei takes off and starts gaining a decent market share, I predict that the other MVNO’s will end up in a price war, and we will see lower prices across the board.
Now for the topic you’ve been waiting for…
Solavei’s Income Opportunity
As I mentioned, the thing that really sets Solavei apart from other providers is their marketing strategy.
While you won’t find the terms “Network Marketing” or “MLM” on the front end of their website, a cursory glance at their compensation plan is all it takes to see that’s what it is…
I want to start by saying it’s a brilliant idea on the part of Solavei’s founders. In many ways it seems like the right business model at the right time.
People are feeling the pinch of the economy, and are looking for ways to save money, and to make more money. Solavei offers the chance to do both. We’ve also reached a tipping point of sorts, upon which social proof is becoming the most influential decision-making factor for many consumers. The marriage of social media with this business model and an in-demand service that we all use seems like a match made in heaven for the owners of Solavei.
Therefore I think Solavei has a good chance of success as a company. The viability of the company is an important factor to take into consideration. The last MLM I joined was Agloco in 2007, and they never even launched! Obviously I don’t want to get burned like that again.
It seems like Solavei is off to a good start. On November 13th, they announced that they were up to 65,000 members, and had paid out over $1 Million in commissions to its members. So clearly, some people are already making money with this opportunity.
Customers of Solavei’s mobile service are automatically given the option to enroll in the compensation program. There is also an option to join as a “Social Member Only” for $149/year, which allows you to participate in the network marketing program without subscribing to the cell service.
What’s wrong with MLM anyway?
Generally speaking, one problem with MLM is that it offers false hope. MLM pitches financial freedom, but almost never delivers such freedom to its participants.
Of course the same could be said about many other business opportunities, including affiliate marketing and other web-based endeavors. However, there is a fundamental difference between MLM and the type of businesses that I teach how to build.
I teach how to build your own web-based business, in which you sell your own products or services, and you build equity in that business. With MLM you don’t really “own” your own business. With MLM, you don’t own the product or the system. You’re at the mercy of a number of other factors, including government regulation that could wipe out your MLM business overnight.
Extensive research has shown that most participants in MLM programs do not make any money. Jon M. Taylor, Ph.D, who studied over 400 MLM companies, concluded that an average of 99.71% of MLM participants LOSE money. That’s 997 out of 1000 people; not very good odds. (source)
Other research has shown that you have a better chance of making money GAMBLING than you do by participating in an MLM program! (source)
And don’t even get me started about the manipulative and cult-like tendencies of many MLM companies. (source)
How is Solavei similar to a typical MLM opportunity?
Similar to a typical MLM program, Solavei pitches an income opportunity within which most of its participants probably will not succeed. I believe that their compensation plan is set up in a way that virtually guarantees that they will not have to pay out commissions to the majority of their subscribers.
Let’s compare it to a typical affiliate marketing situation. With most affiliate programs, you earn a commission for each sale that you make.
With Solavei, you earn a commission for each “Trio” in your downline. A Trio is made up of three mobile service members directly connected to a single member. As it relates to your own referrals (your personal network), you only get paid for every group of three customers that you refer.
If you sign up one or two customers, you get nothing. My opinion is that this will allow Solavei to avoid paying out commissions on most of their subscribers. The failure rate for MLM’s shows us that most people don’t make many sales.
If you sign up three customers, you earn $20/month. I have no problem with that commission rate. Three customers would be paying a combined total of $147/month, which makes the effective commission rate 13.6%. It’s a far cry from some of the high commission rates that we’re accustomed to in the Internet marketing world, but I think it’s pretty reasonable for a residual commission on such a popular service.
In addition to Trio Pay, Solavei offers the ability to earn Fast Action Bonuses, Path Pay, and One-Time Path Bonuses.
Path Pay seems to be where the big money is made (see chart above). It is essentially based on the number of Trios in your overall downline. It seems pretty straight forward. For example, if you have a total of 100 Trios in your downline (with at least 8 in your personal network), you earn a Path Pay of $2000/month.
At first glance, that may not seem very difficult. After all, 100 Trios is only 300 customers, right? The problem is that the “failure equation” is built into the Path Pay too. Remember, we’re only counting Trios, not total customers. The odds tell us that most customers will fail to sign up a Trio under themselves. And among those that do sign up a Trio, there will be many who get stuck at 4 or 5 customers. Therefore you will have a large quantity of “orphan” customers who do not belong to a Trio.
So how many customers would it take to have 100 Trios? I really don’t know, but based on average failure rates for other MLM programs, it could be in the thousands. To get up to the 2000 Trio level ($20k/month Path Pay), it might take tens of thousands of customers.
Another phenomenon you will find in MLM, is that a tiny percentage of “superstars” make a lot of money. While the 99.71% lose money, and another 0.28% (my estimate) make a little money, there is 0.01% that makes a LOT of money.
For a funny look at this phenomenon, check out the 2007 movie Believe, which is a mockumentary poking fun at the entire MLM industry.
So you may be thinking, all you have to do is sign up a superstar in your downline, and you’re set. However, Solavei already thought of that too…
They enacted the 40% rule, which states “Beyond Social Partner, no more than 40% of the total Trios required to advance to a given rank can come from any single individual’s network.” With this rule, you could end up with untold thousands of customers in your downline that don’t count.
Is this really a new thing?
In my research I was reminded of Excel Communications, which was a long-distance telecommunications company that used MLM to market their service in the late 1980′s and 1990′s. They sold over 200,000 franchises through their MLM program, and became a highly successful billion dollar company.
I personally know people who were Excel resellers, and they weren’t making much (if any) money. But the MLM model clearly worked for the company, as they became the youngest company ever to join the New York Stock Exchange in 1996. I suspect that the MLM failure/success rate was applicable to Excel, with most of its participants losing money, while a tiny percentage raked in a fortune.
Interestingly, Excel also operated in a similar manner as Solavei, in that they didn’t own a network, but were reselling long distance service on other companies’ networks.
Eventually, Excel did acquire their own network, and were subsequently bought out by a larger telecommunications company. After the market conditions changed, Excel ended up filing for bankruptcy in 2004, and stopped paying commissions to its franchisees.
I’m not insinuating that something similar will happen to Solavei, but it’s something that needs to be taken into consideration. In general, it seems to me that MVNO’s are often not here for the long term. This can be seen by the number of defunct MVNO’s listed on Wikipedia.
If an MVNO isn’t successful, it goes out of business. I can only imagine how much it costs to buy mobile services in bulk. Needless to say, these companies have a lot of overhead. On the flipside, if an MVNO is highly successful it often gets bought out by a network owner.
So what happens if Solavei makes it big time, and T-Mobile decides they want to buy back that piece of the pie? Or what happens if another company buys T-Mobile and decides they don’t want to compete with Solavei? Of course it’s a little more complex than that, but there are a number of scenarios that could change the game and put Solavei out of business at some point in the future.
Why is Solavei different from other MLM companies?
In spite of what I would consider to be some shortcomings in Solavei’s compensation plan, there are some additional factors that still make Solavei an attractive opportunity to me.
One factor is the service they are selling. Unlike many MLM’s which sell supplements and other things that most people don’t really need, Solavei is selling a service that its customers are already paying for. As I explained above, the service itself is high quality (T-Mobile’s network), and their price point will enable most of their customers to save money.
Unlike most MLM’s, which encourage or require their participants to keep buying more stuff, Solavei doesn’t really have anything else to buy. There are no contracts with their monthly mobile service, so customers can leave at any time. If customers are happy with the service, they’re going to stay anyway. There’s really no pressure to keep buying anything.
I also like the emphasis on social sharing, and the web-friendly approach they are taking to MLM. I’m an Internet marketer, and while many MLM’s don’t want their participants competing on the web, Solavei seems to welcome it.
As actor Stephen Baldwin says in the following video, “instead of a thousand people becoming a millionaire, the idea is a million people can become thousandaires…”
Obviously, the idea of becoming a thousandaire doesn’t excite me, but I think it’s probably an accurate depiction of the program. Most people are not going to get rich with it, but a lot of people will make a little money.
My Personal Conclusions
Since I’ve decided not to use their service at this time, I signed up as a “Social Member Only”, which allows me to promote Solavei and earn commissions through their compensation plan. I don’t expect it to be a major income source, but perhaps it will at least compensate me for the time it took to write this article. If the results exceed my expectations, I will certainly post an update.
The cost of becoming a Social Member is $149/year. If you subscribe to their mobile service ($49/month), there is no need to pay to become a Social Member, as you can automatically enroll in the compensation program.
Do I recommend joining? It all depends on your individual situation. For the right person I think it could be a great opportunity. For those in areas where T-Mobile service is strong, it could result in easy sales. If it’s going to distract you from building your own business, skip it. If the idea of saving money on your cell phone bill and potentially making a little extra money each month excites you, try it out.
To learn more about Solavei check out these links…
I hope you’ve found this review to be balanced and helpful. As always, you are welcome to leave your comments below.
Have a great day!