NEWS

Who wants to be an MVNO? The evolution of the wholesale market

October 10, 2016 - Openet

MVNOs – Mobile Virtual Network Operators – have no physical networks, lease wireless capacity from existing mobile service providers and, though they resell services under their own brand name, are highly dependent on their enabling operator. On the face of it, not a strong position from which to build a successful telco business.

On the upside, they’re a retail business, free from the pressure to invest in primary technology and to find a return on that on huge investment. But they have other challenges.  To be successful they must differentiate themselves from some pretty powerful competition – not least, very often, from their own ‘foster-parent network’.

No easy task. In these days of low-cost services and all-you can-eat bundles, falling rates (and revenues), highly competitive markets in almost every geography, and regulators steadily ratcheting down on once-profitable areas of the mobile business, how do you differentiate? And where is the attraction in starting up any kind of mobile service business?

To say this, however, is to see mobile communications purely as a utility business, churning out a commodity product with steadily declining returns. But the mobile business is much more than that. For many organisations and enterprises, mobility is a key part of their digital strategy.  And for consumers and users, a mobile device is not only absolutely central to their lives, but a device whose potential (in commercial and technological terms) we have only begun to tap. Many enterprises would like a piece of this.

New players, new revenues

Few MVNOs enter the market aiming to turn a profit out of basic voice, messaging and data services. Primary operators – MNOs – already do a great job selling their own product, and where they see the opportunity to address a ‘price-sensitive’ market segment, they don’t do too badly with budget sub-brands such as O2’s giffgaff in the UK or Orange France’s Sosh.

But this doesn’t mean there isn’t new revenue out there.

In a saturated market, creating a competitive position is all about being visibly, tangibly different, and offering the customer a better customer experience – one that’s better aligned to their broad interests and their personal profile. And many successful organisations and enterprises are well positioned to provide this. MVNOs offer an opportunity for them to bring their success in other spaces – the high street, the news stand, the cinema – into telecoms.

 

Read more at Disruptive Views

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