MVNOs take center stage

Arnaud Lassalle, LHS
27 Sep 2006
00:00

Nearly every consumer in the world has access to mobile telephony. Now that the markets have matured, consumers can choose between three, four or sometimes even more operators.

After years of prosperity and aggressive pricing policies geared at acquiring new subscribers, many operators have changed their plans, ceasing expensive acquisition campaigns and instead focusing on retaining high-spending users.

With these changes, new mobile virtual network operators (MVNOs) are emerging, mainly in Europe and North America.

MVNO business model


There is actually not just one business model but several. However, two principles remain: an MVNO has an agreement with an existing mobile operator and an MVNO owns the relationship with the customer.

The MVNO business model is highly elastic. At one extreme, the MVNO will only be responsible for marketing, sales and distribution. At the other, this role can be extended to ownership of network equipment connected to a foreign mobile network.

Based on this model, several categories of MVNOs have emerged.

The "no-frills" operator offers cheap call rates with a very simple service, often limited to voice and SMS. Examples of these are Telmore in Denmark, Tchibo in Germany and Tesco in the UK.

"Community" MVNOs are designed for specific communities such as expatriates. By their nature, the services they offer are typically operated in foreign languages and international call rates are cheaper. Operators using this business model include Ay Yildiz for the Turkish community in Germany and Movida Cellular for the Spanish community in the US.


There are also "white label" operators that are similar to no-frills, but generally offered by mobile operators under a new brand so that their existing customer base is not affected by drastic price reductions.

"Content"-driven MVNOs offer specific content such as sport statistics, video, pictures or music together with mobile telephony. One example is Disney Mobile in the US, with offers targeted at families with Disney content.

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