A new and more sophisticated breed of MVNO is evolving and looks to be well on the road to becoming a major force in the international wireless industry
After a rather patchy start confined to particular regions, mobile virtual network operators (MVNOs) are now literally queuing up to attack wireless markets across the planet. In the space of barely one week last December, for example, giant discount retailer Aldi unveiled a no-frills service in Germany, Virgin struck a deal with C Cell to launch Virgin Mobile South Africa in the first half of 2006, Spanish cable operator Telecable reportedly received an MVNO license from Spain's regulator, Baron cut over a service in the Netherlands using KPN's network, the world's largest convenience chain 7-Eleven introduced an out-of-the-box service throughout Canada, and the Philippine's PLDT/Smart Communications entered into a strategic partnership with MobileOne to provide MVNO services for Filipinos working in Singapore.
Norbert Sagnard, principal consultant with Sagnard Marketing Associates and chair of November's IIR conference 'MVNO Business & Partnering Strategies' held in Cannes, believes that MVNOs are '"&brkbar;the biggest opportunity of the decade in mobile telecoms.' And, according to estimates aired at the Cannes event, the global MVNO market size in 2010 could be anywhere from $10 billion to $30 billion. This is certainly not peanuts, even at the lower end.
In reality the MVNO church is a very broad one. It extends from simply buying capacity wholesale and selling it retail at one end of the spectrum, to Virgin Mobile-style investment partnerships between the MVNO and the mobile network operator (MNO) at the other. Global management consulting firm DiamondCluster International has identified three main variants of the MVNO model: pure reseller, the hybrid reseller/MVNO and the pure MVNO. Basically what differentiates these is the level of the hosted company's input to, and control over, the finished product.
Pyramid Research slices the MVNO pie in a slightly different way, distinguishing between the MVNO's operational focus and its market focus. 'Today, most MVNOs are operationally light, voice-centric and consumer-oriented, and highly dependent on the host operator's network,' reports Pyramid Research senior analyst Ozgur Aytar.
'Over the next year, we will see the emergence of a new and more sophisticated breed of MVNOs that will be less 'virtual' than most, managing or partnering to control key elements of IP-based network infrastructure, such as advanced back-end billing systems, customized handsets, and application servers.'
On the market focus front, Pyramid Research groups current MVNOs into four types. These are: the voice-focused, price-driven mass market MVNOs (examples including Debitel, Fresh and Tracfone); the voice-focused, niche-focused MVNOs (China Motion, Primus Wireless and Transatel); the voice plus, brand-driven MVNOs (Virgin Mobile, Boost Mobile and M6 Mobile); and the data-focused, niche MVNOs (ESPN Mobile and SK Earthlink).
Hosts and hosted get closer
The demarcation between an MNO and an MVNO is also blurring. In one sense, some of the former are themselves becoming more 'virtual' - you might even style them 'VMNOs' - by dint of outsourcing the operation and management of their networks to infrastructure vendors.
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