Research Notes

MVNEs will pave the way for more niche mobile players

Strand Consult has worked for many years with MVNOs and discount mobile service providers in Europe, which in many countries have become an established part of the market. However, there is a new important market development taking place involving a new breed of mobile player – micro-segmented mobile providers and branded resellers. These companies will lead to a more interesting mobile experience for many consumers, as well as helping operators to reduce churn. A key facilitator of this development is the emergence of MNEs (Mobile Network Enablers) and MVNEs (Mobile Virtual Network Enablers). An MVNE functions as a link between MNOs and mobile providers that do not have their own network. MVNEs typically manage the technology, user data and terminals. They also tend to reach roaming agreements with foreign MNOs on behalf of the mobile providers that they ‘enable’. Part of the MVNE’s task is also to make contact with potential players without experience in offering mobile services, or even ones that have never considered entering the mobile phone industry. Potential MVNE clients include companies with especially strong brands that could be leveraged to offer mobile services to their existing customer base. MVNEs are much less restricted by stringent national regulations than MNEs, which are basically MNOs. This gives MVNEs more freedom to ‘discriminate’ against less appealing potential mobile providers, either by excluding them or offering them poor terms.

In some European countries, MNOs are obliged to accept mobile providers on their network and in certain countries, including Germany, MNOs must offer all comers the same basic terms. Usually, however there will be no point discriminating anyway, since a mobile provider could simply switch to one of the MVNE’s competitors. MVNEs are central to the future mobile market. On the one hand, they make it easier for MNOs to gain mobile providers and, on the other, they help lower the entry barrier for players that want to extend their services to the mobile arena. However, it is vital for MVNEs to add value, rather than merely selling or reselling the operator’s platform or network to a newcomer. Some players in the market dream of establishing themselves as an MVNE through an agreement with a MNO, and then making money on their share of the traffic generated by their customers. These MVNEs believe that based on their greater volume they can strike favourable deals with the MNOs and simply take their place in the value chain. However, this kind of thinking would only make them an expendable middleman. It won’t take long for their mobile provider customers to discover that they would be better off dealing directly with the MNO. Therefore, to justify their existence in the value chain, MVNEs must actively seek to add extra value. Areas that could be explored include providing counselling, guidance and market intelligence. The challenges for MNOs in this changing market are detailed in our new report, How to Succeed in the Second-Generation MVNO Market.

How to get success in the second Generation MVNO Market

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