The Emerging MVNO Wireless Market

Put simply, a new breed of mobile service provider is riding into town - the MVNO. Unlike the fixed line market, which has spawned several layers of service provider over the past few years, currently the mobile market is comparatively flat. At one end of the scale are the Mobile Network Operators (MNOs) [vertically integrated mobile telcos] and at the other end are the service providers [essentially resale channels for MNOs]. In between these two is a gaping 'white space' waiting to be filled by new breeds of service provider. For want of a better term, these new aspiring upstarts are loosely dubbed MVNOs.

Right now there is a ground swell of interest coming from a wide range of organisations to become MVNOs and this comes at a time when the entire mobile telephone industry is about to undergo significant changes. These changes (the emergence of 2.5G and the coming of 3G), coupled with a thirst for new innovative services from customers and the push of technology taking mobile from a 'pure voice play' into the realms of multi-media, creates significant opportunities for existing operators and new entrants alike.

Mobile, which has been standing in the wings of the 'telecoms roadshow' for many years (and seen by many as an 'adjunct' to fixed line services) is now taking centre stage in the telecoms arena. Large premiums have (and are) being paid by many of the world's top telecom companies to get a stake in the mobile market

This then sets the scene for the beginnings of a much more vibrant mobile industry which will have plenty of space to accommodate emerging operators and new entrants who can provide new tiers of service, much like switched & switchless resellers and value-add service providers have done in the fixed line market. Typically, MVNOs [horizontalists] will provide services without owning spectrum, infrastructure and base stations, effectively separating the radio infrastructure from the intelligent components, enabling them to focus more on innovation and service differentiation.

Traditional MNOs [verticalists] face many challenges in the next few years, not least of all to find ways of covering the cost of their 3G licenses and 3G network construction. The MNOs primary focus will be on trying to improve performance and coverage of their networks and this is likely to divert their focus from developing applications themselves.

This then opens an opportunity for applications and content partnerships - an attractive proposition for those that have:

i) the requisite skills; and
ii) an established brand presence

enabling them to move the mobile value chain from a traditional telco [vertically integrated] model to one of service creation, niche opportunism and innovation.

MVNOs will appear in many different flavours, ranging from full MVNOs, i.e. those that own their own mobile switching centres (MSCs), to MVNO-like operations that focus on horizontal markets like, gaming, sports, m-commerce, entertainment and various kinds of personalised marketing.

The time has come for the horizontalists to square up to the verticalists - it is going to be an exciting and challenging time. Not least of all, to find ways of overcoming the regulatory barriers that has stifled MVNO entry so far.