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October 30th, 2013, Vol:1
 

Editor's Words

By Sridhar Pai, ceo, Tonse Telecom

 

MVNOs are still relevant to MNO wholesale strategies

While MVNOs (Mobile Virtual Network Operators) are not a new phenomenon, they continue to innovate and stay relevant. In many cases, they cause the MNO (mobile network operators) to thrive and are already a key bullet in the growth wholesale growth strategy of many global MNOs. While the MVNO wave has completely bypassed the Indian shores, except for a brief period of flirting which Richard Branson's Virgin Media had with Tata Tele, to most Indians, MVNO is an alien concept.

While Indian regulators still have a long way to go in terms of fixing current Indian telecom problems - the much debated spectrum pricing for 1800MHz, the much anticipated auction of 700MHz, the still unresolved Intra-circle roaming, and more importantly defining an unambiguous and comprehensive M&A policy, it appears that things like 'spectrum sharing (active)' or MVNO would be a far cry for the Indian policy makers to wrestle with today. There are simply too many things on the plate for too long.

Having said that, it might still not be out of place to take a look at what is going on with the MVNO world outside the Indian shores. As data traffic begins to grow and M2M trials are seen more frequently, perhaps the MVNO discussion should resurface. Will the famous Indian minutes factory that made way for voice at 2cents a minute, now need to borrow a leaf from data MVNOs to create a wholesale bits model to spread the reach of mobile broadband?

Globally many variants of MVNOs have been launched and continue to be introduced in the 4G era. Some have been retail focused (off-shoots of large consumer outlets or general retailers), some mass / and several niche oriented MVNOs (targeting ethnic, international migrant communities), while some others are converged / fixed service provider based (telenet, BT, ONO) and so on.

MNOs on the other hand have been placing a heavy focus on wholesale growth. Even mature markets continue to witness fairly high birth-rate amongst MVNOs although they continue to battle an equally high early mortality rate. A most common reason for MVNO failure has been unfavourable regulatory rules.

MVNOs have made varying levels of penetration in subscriber market share depending on country (varies from less than 1% in Africa to as high as 19~20% in Germany).

One of the big risks for MVNO business is the price volatility of the minutes business - as a relatively small drop in price can completely negate a business viability of the MVNO, a reality in emerging markets.

  • According to some industry observers such as CSMG, MVNO models are shifting from standalone independent models to branded license models (where a strong underlying retail brand for example, will focus on cross-selling and the core business-uplift and the actual telecom revenue is not so big a driver anymore).
  • MVNO set up and activation is being driven by managed service models provided by MVNEs.
  • While certainly in its infancy, an interesting twist to the telco-OTT battle is of course the introduction of MVNO OTTs (such as Republic Wireless and Yuilop in the US) which offer calls offloaded over Wi-Fi (and thus are cheaper than regular calls) or have other variants to the service plan.
  • Some MVNOs are trying to find ways to partner with multiple MNOs (some 3G and others 4G for example), some IPX (roaming hub operators) to increase outreach. In some cases, 4G MNOs are demanding from their MVNO partners to invest in carrier-class Diameter Edge Agent or DEA to ensure full Diameter capability at the network edge.
  • MVNOs entering the M2M space or partnering with M2M providers in some fashion is beginning to be noticed as well and this space is likely to grow significantly - especially for certain types of applications such as smart home, energy management and transport verticals.

Sridhar Pai runs Tonse Telecom, a Bengaluru-based telecom research and consulting house that is a research partner to Light Reading India.

 
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About Tonse Telecom

Tonse Telecom is a research, consulting and advisory services organization focusing on the India telecom sector. Tonse Telecom enables telecom equipment vendors, ISVs, infrastructure developers and investors for success in the Indian telecom marketplace.

Tonse Telecom has onboard, a team of reputed senior industry executives and consultants who provide advisory services on specific projects. Tonse covers a broad spectrum of telecom technologies that include 3G, Wi-Fi /BWA, IMS, FMC and Triple Play, VoIP, Mobile VAS, End-device Applications and Mobile Content.

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