Time for MVNO thaw

10 Feb 2006

Why are MVNOs so hot in North America and Europe but not in Asia‾

In Asia we've prided ourselves on having the fastest mobile networks, the keenest users and the coolest handsets.

But when it comes to plain commercial sophistication, Asian operators still have something to learn from their counterparts abroad.

Some genuinely creative mobile businesses are emerging in North America, based around branding and content. For all their success, Asian mobile markets are still driven primarily by price and handsets.

When you look at the nature of some of the US MVNOs you sense the gulf.

For example, youth-oriented Amp'd delivers full Web access across EV-DO networks as well as a dozen or so video channels. ESPN Wireless offers different sporting games and scores through different operators, maximizing their reach.

About to launch is Helio, the $460 million JV between SK Telecom and Earthlink, aimed at the young and tech-savvy and with exclusive access to hot Korean handsets.

One driver of all of this is the availability of wholesale EV-DO ahead of W-CDMA. But that's not the whole story. EV-DO straddles Korea's airwaves but free of any commitment to wholesale.

Asian regulators are reluctant to force operators to open up to virtual players, and operators even more so.

To be sure, the early flirtation of Singapore and Hong Kong operators with MVNO three years ago has helped chill the market.

(SingTel, which strangled Virgin Mobile Singapore at birth three years ago, has just taken full control of Virgin Mobile Australia - a clash of cultures if there ever were one. How long can it last‾)

The conventional wisdom, however, is that competition will drive operators to MVNO or its cousin, the MVNE (mobile virtual network enabler).

MVNEs are essentially white label MVNO operations. Ovum points out many are just small vendors and expects they will fade away as margins contract.

The strength and potential of the MVNO is in being able to leverage brands, and this is what Asian firms seem unable to do.

Companies like China Unicom have obtained MVNO licenses in Hong Kong, but purely to retain roaming revenue.

The one likely prospect is the migrant worker segment.

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