Mobile virtual network operator
||This article possibly contains original research. (March 2011)|
A mobile virtual network operator (MVNO) (or mobile other licensed operator (MOLO) in the United Kingdom) 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. An MVNO may use its own customer service and billing support systems, marketing and sales personnel or it may employ the services of a Mobile Virtual Network Enabler (MVNE).
Background and history
The emergence of the MVNO model in various markets worldwide varied based on 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. 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. Mobile network operators believed that savings from not providing customer service and marketing would offset any revenue lost by selling network access at wholesale rates.
For some of the earlier markets that embraced the MVNO model, such as in Scandinavia, the regulatory authorities sought to introduce the MVNO model to drive competition into a market that was considered to involve significant market power which existed for early entrant mobile network operators in those countries. Regulators believed 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 for the benefit of the consumer. The MVNOs in Scandinavia ended up having a market share above 10%.
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.
Certain mobile network operators believe that there is merit in operating a wholesale MVNO business unit to complement their retail model and have therefore either openly embraced potential MVNO partner or endeavored to launch their own branded MVNO.
The first commercially successful MVNO in the United Kingdom was Virgin Mobile UK, which was launched in 1999. The success of Virgin Mobile UK was replicated 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.
The first MVNO was created by Tele2 in Denmark, and subsequently rolled out in several European markets. This model formed the basis between the cooperation between Tele2 in Sweden and Telia, created when Telia failed to obtain a 3G license in their home market.
As of October 2012 there were 634 active MVNO operations worldwide, which in turn are operated by 503 companies (some companies operate multiple MVNOs in the same country). The largest multi-country MVNO is Lycamobile, which operates in 17 countries. PLINTRON world's largest multi-country MVNE have enabled Lycamobile and by 2016 will be offering its MVNE services in 31 countries.
MVNOs target both the consumer and enterprise markets. The majority of MVNOs are consumer-focused and most have a focus on price as their unique selling point; customers of major carriers spend about 3.4 times as much money on their service as MVNO customers.
|This section does not cite any references or sources. (March 2011)|
- Known also as reseller, White Label, or service provider model. The MVNO owns only marketing, and sometimes billing and provisioning. The MNO owns the MVNO SIM card.
Presently many companies and regulatory bodies are strongly in favour of MVNOs. For example, 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 legislation from NRAs in countries like Ireland and France forcing operators to open up their network to MVNOs.
- OFCOM report[dead link]
- About Virgin Mobile
- Cecilia Kang (28 July 2009). "Sprint Nextel to Acquire Virgin Mobile USA". Washington Post. Retrieved 21 Mar 2012.
- "MVNO Directory". Blycroft. 2012-10-20. Retrieved 2011-10-25.
- "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". 2011-06-27. Retrieved 2012-05-09.
- "1 in 4 MVNOs upgraded to offering mobile broadband". Blycroft. 2011-05-31. Retrieved 2011-05-31.
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