Dell's surprise MVNO move set to open floodgates

13 Jul 2009

The surprise announcement by PC giant Dell that it will offer mobile broadband services in Japan as an MVNO is likely the start of a flood of new entrants into the virtual operator business.

What makes it work for Dell is deal offered by Japan Communications Inc. (JCI), following the completion of its ground-breaking layer 2 interconnection with DoCoMo\'s 3G network March 13.
The interconnection means that JCI\'s GGSN (gateway GPRS support node) gateway communicates directly with the SSGN (serving GPRS support node) inside DoCoMo\'s network - with the result that DoCoMo is unable to see or influence what JCI is doing on its network.
No carrier or MVNO in the world has previously connected a GGSN to a 3G network.

\'After 13 years, we are finally getting to first base,\' said JCI CEO Frank Seiji Sanda.

DoCoMo\'s MVNO prices are determined by the Ministry of Internal Affairs and Communications (MIC) on the basis of networks reasonable costs and reasonable profit - the latter set at around 5%.

JCI is offering Dell and other makers and suppliers of hardware and software the possibility of embedding a version of its Doccica service, which is sold as a $150 rechargeable USB dongle, with network connection at 10 cents a minute and includes 500 free minutes. The service is supported by JCI security and offers optional Wi-Fi access, which includes the Shinkansen bullet train.

Sanda sees his company an MVNE (mobile virtual network enabler) making it possible for others to succeed as MVNOs rather than being an MVNO itself.

He says that he has been approached by more than 200 companies interested in becoming MVNOs, including other hardware firms such as Sony. He believes that many will follow Dell\'s path as the margins in the hardware business continue to shrink.

He doubts the model will spread to other countries, mainly because of the high cost of spectrum. \'US networks are too far behind and can\'t support the value propositions,\' he says.

Another recent MVNO development was the launch on March 6 of Softbank Mobile\'s own MVNO high-speed data service using eMobile\'s network.

The company says it is doing this due to a shortage of spectrum, but the idea that an MNO can also be an MVNO has produced a sharp negative reaction from the MVNO Association. The MIC says it is watching the situation.

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