Javier Sanz-Blasco, Post, Telco Strategies & Policy

MNVO Fever

(By Javier Sanz-Blasco)
Mobile Virtual Network Operators are the latest twist in the strategy of many Service Providers who missed the 2G and 3G wagon a few years ago… Not only Service Providers, other corporations (Carrefour, The CarPhone Warehouse, Disney, 7-Eleven, ESPN, Tesco, Virgin, Wal-Mart…) have launched MVNOs over the last few years trying to leverage the power of their brand for consumers.
According to Deloitte, by 2010, the MVNO market share in Europe is expected to grow up to 25%, becoming a critical area for those players who want to increase presence in the telecom market.
We can talk about two extremes in the strategy of the MVNOs. On the one hand, some MVNOS focus on pre-paid (lower-end) customers, using the brand, distribution channel, customer service and, obviously, price, as differentiators. Their technology is usually 2G and they count with a reduced portfolio of services (Voice and SMS).
On the other hand, we can talk about MVNOs that focus on business users, vertical markets, machine-2-machine applications and other niche markets. They attack with service innovation, data services, content, cutting-edge terminals and, obviously, brand and customer service.
In order to facilitate the set up of the MVNO, MVNE (Mobile Virtual Netwok Enabler) offer a number of strategies that require more or less CAPEX and OPEX expenditure. The use of an MVNE is key for many operators, with regards to what hardware and expertise they must acquire so they can launch their service successfully. The HLR (Home Location Register), central database that contains details of each mobile phone subscriber that is authorised to use the network, is a key element in this strategy.

Some pros about owning the HLR are:
– The operator has more flexibility with regards to product design and billing strategy.
– MSISDN range reservation.
– The HLR will allow a better implementation of personality´s security.
– There is no need of process and SLA with other companies (MNO/MNVE).
– There are less worries about resources, change management… etc.
Some cons about owning the HLR are:
– Higher investment, obviously, in CAPEX and deployment work.
– Dependency on skillful professionals.
– Change and implementation process for new products are responsibility of the operator.
A similar analysis can be done about owning or not a core network and the long-term benefits, depending on the strategy of the MNVO.
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