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Operators will vie for the best MVNO partners
Posted: 11-Jun-2005 [Source: Analysys]

[Research group Analysys predicts 3G will stimulate a new wave of MVNOs. ]

3G will stimulate a new wave of MVNOs that offer services beyond discount voice calls and SMS and increase benefits for host mobile operators, according to a new report, The Future of MVNOs in the 3G Era, published by Analysys, the global advisers on telecoms, IT and media.

With the number of Mobile Virtual Network Operators (MVNOs) growing rapidly in developed markets, MVNOs are already having a significant impact on customer numbers, churn and ARPU in a number of markets. MVNOs are organisations that offer distinct end-to-end mobile services using the network capabilities of an existing mobile operator, but do not own a radio network or spectrum license.

"With over 100 MVNOs launched in Western Europe and over 25 present or due for launch in the USA, mobile operators cannot ignore the impact MVNOs are having," says Dr Mark Heath, co-author of the report, "MVNOs have acquired nearly a quarter of all mobile users in Denmark. In the UK, Virgin Mobile has propelled T-Mobile from last to first place in terms of market share by customer numbers, while in the USA, Sprint PCS hosts more than 15 MVNOs."

The report shows that the service capability, capacity and cost limitations of 2/2.5G networks have constrained the competitive focus of today's MVNOs within price competition and limited non-voice offerings. 3G is now poised to fuel the number and diversity of MVNOs, allowing a range of organisations to deliver content and services from their core businesses, including multimedia data services and downloads. "A new wave of MVNOs are already leading the way," says Alastair Brydon, report co-author, "Universal Music, TV channel M6 and radio station NRJ all plan to set up MVNOs in France. Sports content provider ESPN, owned by Disney, plans an MVNO in the USA while a number of data-only MVNOs have emerged with services for mobile devices."

The report shows that all mobile operators have something to gain from hosting 3G MVNOs. "Although only a relatively small number of mobile operators have taken MVNOs to date as some perceive MVNOs in their discount form to be a major threat the service capabilities of 3G strengthen the case for mobile operators to embrace MVNOs", says Brydon.

The report shows that the growth in 3G MVNOs may cause changes in host operator allegiances, as mobile operators vie for the right MVNO partners. "Hosting MVNOs could be the only viable strategy for 3G new entrants to achieve profitability quickly and avoid unsustainable levels of subscriber acquisition costs," comments Brydon, "in addition, mobile operators may find themselves battling not just for the loyalty of their own customers, but for MVNOs that have millions of customers."

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