Research Notes

Should mobile operators embrace MVNE’s?

Mobile operators that want to target specific segments using niche mobile providers have the option of seeking to attract MVNEs onto their networks, in addition to virtual mobile providers. An MVNE acts as a link between mobile operators and mobile providers that do not own their own networks.
The following elements are important to this type of relationship:Self-service – an interface allowing the mobile provider to make changes without involving the MNE. For example the provider can create new products, number series, price plans, handle end-user signups/changes etc without using resources from the MNE. The elements above do however depend on the type of wholesale agreement between the mobile provider and MNO. In some wholesale agreements it is stipulated that any price change must be negotiated between the MNO and mobile provider.Provisioning – the whole technical aspect of handling the areas mentioned above. Many mobile providers cannot handle developing these areas themselves.Consumption counter – collects the end-users telephony and services consumption figures. This needs to handle prepaid, post-paid and scratch cards. For prepaid and especially scratch cards, consumption needs to be monitored in near real time to avoid losses.End user billing – handles creating a correct and understandable invoice for the end userReporting tools – creates statistics of customers consumption patternsCRM systems – handles the mobile providers dialogue with their customersMNOs with an MVNE strategy need to worry less about handling the purchase and implementation of platforms for mobile providers without their own networks. The MVNEs gain access to the network, and the platforms can be purchased from third-party technology providers. These could be IM platforms or SDPs.
The extra link in the value chain does, however, make it significantly more difficult for MNOs to bind mobile providers to their networks, and thereby lock onto them. This is because the MVNE functions as a technical link between the MNO and the mobile provider, which to a great extent makes the mobile provider without their own network independent of the MNO’s network, in much the same way as an MVNO.
Therefore, there are no technical barriers which prevent a mobile provider changing network provider if another MNO offers them a better deal – provided the MVNE platform can also be switched to the new network, and that the mobile provider is not using any of the MNO’s own platforms.
An MVNE strategy should thus be pursued cautiously, as it is vital for MNOs to be able to hold on to the mobile providers already operating on their networks.
Some MNOs have already experienced MVNOs switching networks, resulting in an enormous drop in revenue and huge overcapacity in their networks. For example, the MNO TeliaSonera in Finland witnessed the MVNO Saunalahti changing networks to Elisa’s. As a result, Elisa’s market share overnight went from 28.2% to 37.9%, while TeliaSonera’s dropped from 56.8% to 47.1% . Quite a significant change in market shares!
Moreover, by allowing MVNEs onto their networks, MNOs also risk allowing yet another ‘MNO’ into the market. In many ways, an MVNE does business in the same way as an MNO, with the same option to partner up with mobile providers without their own networks and to offer their own services as ‘white label’ products. Allowing MVNEs onto their networks can thus intensify the competition in the market.
So, having MVNEs is a double-edged sword. Our report, How to get success in the second Generation MVNO Market, analyses these problems in detail, helping you to choose the right strategy for your business.

How to get success in the second Generation MVNO Market

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