In the future I think we will see more MVNO’s:

(i) From service providers that do not have a mobile licence and want to provide their enterprise customers with a FMC solution
(ii) In the m2m market – MNO’s are unlikely to have the resources/ expertise to address this market.

Jeanette Whyte

I have left a more extensive comment in your other article on data only MVNO, explaining how the MVNO business model may work in some markets. And how it sometimes work well, but not exactly as predicted.

For Instance, Virgin begun its operation ,almost a year back (Sharing Infrastructure with TATAs) has managed to garnered only a Million subs in markets like Mumbai & Delhi.(They have clearly defined their target markets as “Youths” (Age bucket of 15-25) , whereas other opertors are growing at a franatic pace. I think , they have failed miserably on cashing on their brand ” Virgin” , which is highly successful in Europe , Distribution channel and capturing subscriber base.

With 3G setting its foot in India, other operators will be far ahead , in terms of service and Virgin may not be able to manage itself.

There might be a case, where Virgin becomes a distinct picture.

If this model is working in India, then why are there not any other operator working on this model?

Its important to understand that there are three basic types of MVNO’s each with different target markets and chances of success. The most common MVNO has been a start-up that has gone out to capture a particular market segment relying on its market knowledge and product positioning to succeed against established competition. This is a tough business case with a high risk of failure as it has to create a brand and secure distribution channels, while facing the same costs of customer acquisition as the established players.

A second type of MVNO has been an established brand usually in a consumer market that has entered the mobile business seeking to expand its brand presence. Some of the biggest global consumer brands have attempted this with some spectacular failures such as Disney, ESPN, etc. Fundamentally consumer brands don’t understand the mobile business and rather than increase brand value they’ve generally ended up destroying it. Today there are much better ways for consumer brands to use mobile for advantage. This is in fact the target for my new company Gomeeki.

Lastly, and generally the more successful MVNO model has been an established telecom player that does not have the chance to build a mobile network but wishes to take advantage of FMC to add value to its established customer base.

MNOs and MVNOs often tend to have rather tumultuous relationships, which end up hurting the MVNOs a lot more than the MNOs. I think the MVNO model will have more of a possibility to succeed once the operators have a real stake in the success of the MVNOs. So I foresee the successful MVNOs in future having a lot closer relationships with their host networks, possibly through equity ownerships or other similar arrangements. This will obviously need to be coupled with great marketing and a focus on a non-overlapping (with the host), niche segment of the market.

The bottom lines are always pronounced as in this discussion also.As the contributors lengthen to the descending order to Mr Alok Ranjan, there is increasing bouyancy. But the iniitial comments of Ricky Cochran are very true & should be a bible for most aspiring MVNOs.

My views as a social practitioner suggest that MVNOs will succeed in the developing coutries of the SOUTH far greater than in the NORTH the MVNOs too will migrate from low base to higher base of netwrok to VAS to Mobile commerce and banking services in these terrain.

In these cases numbers will sanctify as there is a virtual market begging for such services.Prof Yunus has deftly combined these features in Grameen Phone.We at Grasso has done the same thing where we had a better image than BSNL, initially at least. But as stated already by most other fellow members the greed of the biggies to capitalise killed the goose as they failed to give services with their high cost of manpower to remote areas while they normally tend to drive out the lowly ones.

The efficient man managemnat with strong robust back end will be the key once the MNOs & potential MVNOs decide on the turf to tango so that it is complementary to each other. And I see no reason that not to happen as technology leapfrog for a better value realisation to customers safisfaction.

Regards
Santanu

Although, I am sounding positive. The MVNO must realize that they are dependent on the biggies for their infrastructure. They must not get into the game of low price war.

Another thing that I have noticed is the lack of effective and easier payment mode. Voucher Management System (VMS) is becoming popular day-by-day. But it is still being linked with prepaid services. That is where we have developed our own VMS to help the MVNOs provide more value added services, discounts, bonus, etc to the loyal customers.

Existing examples:
- Amazon’s Whispernet MVNO for the Kindle mobile e-readers
- Companies like Jasper Wireless who support M2M modules as a global operator with Layer 2 access to various mobile operators’ networks

Future example:
- Dell is becoming an MVNO in Japan for its laptops and netbooks that include a limited amount of service that can be topped off on Dell’s website
- Portable game devices with subscription-based online gaming services

These future MVNOs / business models are something that many analysts here at ABI Research have been looking at for the past 4 or 5 years from different perspectives (mobile operator, device, services, etc.).

Phil Solis – Principal Analyst at ABI Research
http://www.abiresearch.com

Interesting analysis, good work on posting this, and I hope it gets some good coverage. I could probably suggest a few more “rows” for the table you have drawn, and also observe that service providers and resellers are really very close to MVNOs. The differentiation there (apart from regulation), is normally one of with whom the customer believes they are dealing with for telecoms. In the UK, I believe that consumers are much more likely to think Tesco is renting someone else’s network, than Virgin Mobile (even before the merger with NTL). Virgin, in most markets they operate, goes to considerable effort to stand on its own, and even to challenge its host network in certain areas. They also take great pride in the hard work of their teams that gives them better “network quality” ratings from customers than many MNOs including host – this has happened in UK, Canada and India.

As to the future of MVNOs, one can either get scale – Virgin Mobile USA had $1.3bn of revenues in 2008, or focus on a niche with a low cost operation – viz Lycamobile or KPN. You also need real support from the MNO, the operator has to understand the role of the MVNO in the market, and be active in fostering your success. Interestingly there is still only one “mvno” in Africa, maybe the opportunity is to segment and increase the sophistication of marketing to this huge population as new adds growth slows?

Charles

In the UK, both Virgin and Tesco have been very successful in leveraging their well respected brands and wide customer bases, and,as importantly, keeping it stupid simple.

One of the keys to success, as in any business, is to manage the margins – squeeze the supplier and price at a profit. Of course size of base helps in that as that narrows the effects of the overheads and every MVNO must reach a critical mass, and marketing prowess and brand power are a must in getting there as quick as possible.

In the variable costs space, Customer Care can be a huge cost – so partnering with a good quality network with less ‘problems’ is a good start, keeping the tariffs/pricing/billing simple gives less opportunity for confusion and mistakes and is generally cheaper (Tesco have it nailed there I think), automation, web-care, integrating with existing (multi-channel) Care operations all help minimise that cost. The less that can go wrong, the lower the Care costs and the stickier the customer.

And totally agree with the comments about limiting ambition – keep it simple, plain, honest, and play the tortoise rather than the rabbit.

Will the networks reclaim the space? Do they want to? I don’t think so.
Do they have something to learn from the MVNOs? Perhaps they do…