Research Notes

The MVNO Market – The US vs. European perspective

There is no doubt that the MVNO market is large and unquestionably growing, but at the same time many companies are having difficulty working out how to be successful on this market.

Most journalists, regulators, and analysts are rational, critical thinkers, but when it comes to consolidation, many suddenly become converts to numerology, espousing the superstition of magic numbers of firms in market.  The latest criticism is that American mobile market is like the 19th century railroad. This view is wrong for many reasons.  A railroad, once built, can last a century; a mobile network, only a fraction of the time.  If not continually upgraded, a mobile network will expire like a carton of milk. It’s no longer a differentiator to have a 3G network.  If one operator upgrades to 4G/5G, the rest must follow.  Customers won’t drink curdled milk.

Strand Consult has followed the industry consolidation for some 20 years and observes that many have an outdated view of competition. This note compiles some of Strand Consult‘s observations on consolidation over the years, notes which have been used by authorities, investors, consolidators, and parties wishing to extract remedies from the merger. These notes and reports cover strategy, MVNOs, prepaid, remedies, and international comparisons.

The role of MVNOs have been raised in the context of the T-Mobile and Sprint merger. However what most Americans think are MVNOs are actually mobile service providers. The mature MVNO model as is found in Europe is far more developed in the EU than in the USA. In practice, the customer of a service provider cannot change network provider without a change of SIM card. A real MVNO customer on the other hand, don’t need to change SIM card when changing network provider. This is a key issue of competition and switching in the context of consolidation

Today Strand Consult has the world’s largest independent MVNO market research department and we are world leaders regarding publishing and distributing knowledge about the MVNO market and how it is developing. It is our knowledge that the serious MVNO market players are demanding and the companies that are utilising our knowledge and workshops are increasing their success.

It is no secret that many companies pretend to be authorities on the MVNO market. Many reports have been published by people with little or no experience and understanding of this market – reports that are based on their beliefs, rather than factual knowledge.

We believe that you should not judge your strategic knowledge provider based on what he predicts about the future, but rather on what he previously predicted would happen today. When it comes to the MVNO market, Strand Consult has always been the first to publish knowledge about this market and our predictions have been spot on for the past 20 years.

Did you know that we were the first company in the world to publish information about the no frill discount MVNOs? Our initial reports about this market The Moment of Truth – A portrait of the Discount MVNO / Mobile Operators’ success have been sold to over 100 mobile operators around the world and we have held workshops at CxO level for over 70 operators worldwide. It was Strand Consult that published the facts about what was happening in Denmark and the rest of the world followed suit and copied the Danish model.

Strand Consult’s research details the role of compensatory remedies in consolidation. European authorities like to incorporate mobile network virtual operators (MNVOs) into the equation, but even regulators misunderstand MNVOs. In fact, an MVNO is not a mobile operator but an alternative distribution channel for mobile network operators. Germany’s 4 to 3 consolidation featured O2 bought E-Plus. As compensation, the MVNO Drillisch was awarded a golden wholesale agreement with the newly merged entity of E-Plus and O2. Read DG Comp’s decision here: The agreement increased the value of Drillisch by approx. €2 billion, and it subsequently increased Drillisch’s share of the MVNO market from 10-15% to approx. 80%. The shareholders in Drillisch received an arbitrary gift from the antitrust authorities which wanted political cover for a decision that was not justified by the facts. There was no explanation why one MVNO alone (Drillisch) should be rewarded and not the many other MVNOs in Germany.

The 10th of January 2012 is a date that will enter the annals of French mobile history. That was when Free Mobile launched in France using an identical strategy to the strategy being used by number of very successful MVNOs across Europe. The path that Free has chosen is the same as Telmore and CBB originally launched with in Denmark; no handset subsidies or expensive distribution and instead using the saved money to reduce their mobile voice and data prices. Having a low SAC is a quick and efficient way to lower voice minutes prices, resulting in a growth of mobile traffic that will often compensate for the low prices. One of the good things about this business model is that it is the customers with the highest consumption that will benefit most by changing to a market player like Free.

We have published a series of unique reports about the MVNO market that can be purchased individually or together. This is a Collection of seven unique reports targeted at various needs and market players.

With these reports you can save a great deal of time and expensive consultants. In fact there is no consultancy company in the world that has such a deep insight in all the aspects of the value chain as we do here at Strand Consult. Most of the successful players on this market have one thing in common – they are also our satisfied customers.

One of our customers told a large bank: “We spent several hundred thousand Euro getting McKinsey to tell us about this market – and afterwards we purchased a report and workshop from Strand Consult. We learnt two things; that McKinsey has limited knowledge about this market and that Strand Consult had the knowledge we needed.

Together with our reports we can deliver a combination of standard workshops that elevates your level of knowledge, or high-end strategic workshops that can be used in connection with your strategy development. Over 100 operators and a great many of the world’s most successful MVNOs cannot be wrong – the road to success is knowledge and Strand Consult has the knowledge that serious MVNO market players are demanding.

Get the answers to your questions tomorrow, order our reports today and consider combining them with a strategic workshop from the world’s largest strategic knowledge provider on the MVNO market.

We look forward to hearing from you. Please Contact us.

Yours sincerely

John Strand

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