Originally Posted by v0rtex
Because they're "virtual carriers" (forget the technical term for it), they just lease access to equipment from the big networks that manage their own infrastructure (AT&T, Verizon, Sprint, etc) so their startup costs are low - they don't need to pay for the R&D or for future infrastructure expansion, just their bandwidth bill from the upstream telco.
Also, the margins are very high for cellphone services - there's a fair number of decimal places to go down from the standard $0.10 text message fee before you reach the actual cost of sending 140 bytes of data over a radio signal.
Why would big telecoms lease their equipment and infrastructure to these virtual carriers? Are they under utilizing their assets and want to get higher return on them? They are creating competition for themsevles but I guess the earnings from leasing the infrastructure outweigh the lost business.