Mobile virtual network operator

A mobile virtual network operator (MVNO), or mobile other licensed operator (MOLO), is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently.[1] An MVNO may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler (MVNE).

Background and history

The emergence of the MVNO model in various markets worldwide has varied in response to local factors.

In some markets, the MVNO concept came about as the result of regulatory intervention. Regulators wished to force established mobile network operators to offer wholesale access to their network to ensure robust competition to benefit the consumer. For example, in Scandinavia, significant market power existed for early entrant mobile network operators. Regulators there concluded that the MVNO model would be a time efficient and cost-effective route for telecoms companies to enter the market and therefore bring increased competition. The MVNOs in Scandinavia ended up having a market share above 10%.[2]

In other markets, mobile network operators responded to market opportunities to offer their excess capacity at wholesale rates to other entities in an effort to bring in incremental revenue on what would otherwise be unused network capacity. The efficiency is obtained by the nature of the MVNO business model. An MVNO incurs no significant capital expenditure on spectrum and infrastructure and does not have the time-consuming task of building out extensive radio infrastructure, as this remains the responsibility of the host network operator. In some cases mobile network operators operate their own wholesale MVNO business unit to complement their retail model.

An early MVNO was created in Denmark by Tele2 and Sonofon (now Telenor Denmark) in August 2000,[3] and subsequently rolled out in several European markets. Under the agreement, Tele2 was allowed access to use Sonofon’s network for the provision of mobile services and roaming agreements. This model formed the basis for the cooperation between Tele2 in Sweden and Telia, created when Telia failed to obtain a 3G license in their home market.

The first commercially successful MVNO in the United Kingdom was Virgin Mobile UK, which was launched in 1999.[4] This was followed by the United States licensee of the Virgin Mobile brand. Initially an independent company, Virgin Mobile USA was eventually acquired by its host mobile network operator, Sprint Nextel, for approximately US$483 million.[5]

The first MVNO contract in Germany was announced in March 2010 between Vodafone and 1&1.[6] The conditions of the agreement enabled 1&1 to significantly change the mobile market in Germany, introducing in June 2010 its new tariff "Allnet Flat" for less than 30 Euros per month.[7]

Around the world

As of June 2014, 943 MVNOs and 255 MNO sub-brands were active worldwide. This represents a total of almost 1,200 mobile service providers worldwide hosted by MNOs, up from 1,036 in 2012,[8] which in turn are operated by 503 companies (some companies operate multiple MVNOs in the same country).[9] The largest multi-country MVNO is Lycamobile, which operates in 19 countries which is enabled by PLINTRON - World's largest MVNE/MVNA.

MVNOs target both the consumer and enterprise markets. The majority of MVNOs are consumer-focused and most have a focus on price as their selling point; customers of major carriers spend about 3.4 times as much money on their service as MVNO customers.[10]

In addition to traditional cellular voice and messaging services, in 2014, 120 MVNOs also were offering mobile broadband services.[11] In Africa, Uganda has registered three MVNOs so far, some having their own network infrastructure within major cities, but acting as an MVNO out of these cities.[12]

Light, heavy, and full MVNOs

MVNOs are distinguished by their commitment to managing their own technology (operational models).[13] These can range from only a small amount of technical implementation (light or thin MVNOs), through more complete technical implementations (heavy or thick MVNOs) up to a complete network implementation operating essentially the same technology as a mobile network operator, minus the radio base stations (full MVNOs).

United States

There are about 300 MVNOs operating in the U.S., and they are estimated to make up about 1 in 10 wireless subscriptions, or about 36 million. That number has roughly doubled since 2009, thanks to a trend of the big networks allowing customers to more easily switch networks and a significant decrease in the cost of wholesale network capacity rates. MVNOs have tended to receive better customer service marks in the U.S. than the big carriers, with Consumer Cellular, Ting, and Republic Wireless topping Consumer Reports' industry customer service satisfaction rankings.[14]

To better compete with MVNOs, which often tend to offer service at lower rates than those offered by major US wireless networks directly, some major US carriers also market wireless service using their own captive MVNOs or alternative brands such as Boost Mobile (Sprint), Cricket Wireless (AT&T) and MetroPCS (T-Mobile US).

Regulation

In 2003, the European Commission issued a recommendation to national telecom regulators (NRAs) to examine the competitiveness of the market for wholesale access and call origination on public mobile telephone networks. The study resulted in new regulations from NRAs in several countries, including Ireland and France forcing operators to open up their network to MVNOs.

Jordan's TRC issued its first MVNO regulations in 2008 facilitating the entrance of the first MVNO in the Arab world in 2010.[15]

The Saudi government is making preparations to permit MVNO services in the country,[16] and local mobile network operator, Mobily has awarded an MVNE management contract to India’s XIUS.[17]

In Brazil, the MVNO was regulated by Anatel, the Brazilian Agency of Telecommunications, in November 2010. As of September 2014 the combined market share of all Brazilian MVNOs was just 0.04%.[18]

In Thailand, five MVNOs were given a Type II license to operate as MVNOs on the 2100 MHz 3G network of state telecom operator TOT Public Company Limited (TOT) in 2009. As of December 2014 three of the original five MVNOs are still in service.[19]

See also

References

  1. ↑ " Why are MVNOs so hot right now? Thank the carriers". Kevin Fitchard, GIGAOM. Jun. 25, 2012
  2. ↑ Analysys Mason, IS THERE A GLASS CEILING FOR MVNOS?, 17 May 2015
  3. ↑ ITU, Competition policy in telecommunications: The case of Denmark, 17 May 2015
  4. ↑ "Virgin Mobile reaches one million customers". Archived from the original on 16 October 2006.
  5. ↑ Cecilia Kang (28 July 2009). "Sprint Nextel to Acquire Virgin Mobile USA". Washington Post. Retrieved 2012-03-21.
  6. ↑ "1&1 Internet signs MVNO deal with Vodafone Germany". Telecompaper. 25 March 2010. Retrieved 2016-02-22.
  7. ↑ "1&1 All-Net-Flat + 1&1 Internet-Flat + telefonieren und surfen ohne Limit". 30 June 2010. Retrieved 2016-02-22.
  8. ↑ GSMA Intelligence. "GSMA Intelligence — Research — The global MVNO landscape, 2012–14". Retrieved 17 July 2015.
  9. ↑ "MVNO Directory". Blycroft. 2012-10-20. Retrieved 2011-10-25.
  10. ↑ "2011 Annual Report and Analysis of Competitive Market Conditions with Respect to Mobile Wireless, including Commercial Mobile Services, WT Docket No. 10-133. , Table 4 (Page 35): (1% of revenue per 1% of customers vs. 0.95% of revenue per 3.37% of customers) Service Provider Share of Subscribers and Revenues (Year-End 2009) based on John C. Hodulik, et al., U.S. Wireless 411, Version 37.0, UBS, UBS Investment Research, 7 September 2010 (U.S. Wireless 411 2Q10), based in turn on Company SEC 10-K filings" (PDF). 2011-06-27. Retrieved 2012-05-09.
  11. ↑ "1 in 4 MVNOs upgraded to offering mobile broadband". Blycroft. 2011-05-31. Retrieved 2011-05-31.
  12. ↑ "These are Uganda’s Mobile Virtual Network Operators (MVNOs)". Techjaja. 2015-03-13. Retrieved 2015-03-19.
  13. ↑ One Development, Basic MVNO concepts, 17 May 2015
  14. ↑ Kharif, Olga. "The Phone Companies People Actually Love". Bloomberg.com. Retrieved 2016-02-10.
  15. ↑ "The right call: Mobile remains a sector highlight, while 3G access boosts demand". Oxford Business Group. January 2012. Retrieved 10 February 2016.
  16. ↑ Oxford Business Group, MVNOs signal change for Saudi telecoms, 17 May 2015
  17. ↑ "Mobily Awards MVNE Contract to Xius". MVNO Dynamics. Retrieved 17 July 2015.
  18. ↑ Marcelo Teixeira. "MVNO Market in Brazil". Tech in Brazil. Retrieved 17 July 2015.
  19. ↑ Yozzo.com, Thailand’s MVNO market 2014, 17 May 2015
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