European Mobile Virtual Network Research

The European network operators' view of MVNOs (mobile virtual network operators) is apparently shortsighted and reactive, according to the 'Turning MVNO Pain Into Gain' report by Forrester Research.

The European network operators' view of MVNOs (mobile virtual network operators) is apparently shortsighted and reactive, according to the 'Turning MVNO Pain Into Gain' report by Forrester Research.

Forrester defines an MVNO as a company that buys network capacity from a network operator to offer its own branded mobile subscriptions and value-added services. Their report findings indicate that, instead of hosting a few brand-oriented MVNOs out of fear, network operators should adopt a portfolio strategy that spreads risks and draws benefits from all the types of MVNOs. This would result in expanded market reach into niche consumer segments, optimised network capacity utilisation, and growth of data applications.

Forrester analyst Michelle de Lussanet suggests, 'Unlike familiar service providers that simply resell operator-branded subscriptions, MVNOs go further by applying their own brand and offering unique value-added services. We expect MVNOs to pursue a continuum of operating models and become a permanent fixture in Europe's mobile industry over the next five years.'

She added 'While arguments rage as to whether network operators will see a net profit gain by hosting MVNOs, these arguments miss the point. Network operators will have no choice but to host MVNOs over the next five years as regulators demand competition, network operators need to fill spare capacity, and user saturation requires marketing help. While a few network operators actively pursue the MVNO hosting business, the vast majority see MVNOs as a necessary evil, and plan to host just a few, seeing only big consumer brands.'

In consequence, Forrester advises that network operators should try to maximise MVNO potential with a portfolio strategy instead of simply reacting to rivals or reluctantly trying to please regulators. This approach balances risks and draws benefits from three types of MVNO candidates: media, retail, and financial services firms that typify the brand MVNO; fixed, cable, and mobile-telecom firms; and device MVNO candidates, which might come from the automotive, entertainment, or utilities industries.

In this sense, de Lussanet added, 'The MVNO portfolio strategy applies to all types of operators, whether small or large, new or established -- only the percentage of capacity allocated to MVNOs will vary. To keep benefits and diversify risk, network operators must exercise restraint and keep the portfolio balanced as the three overlapping waves of candidates emerge. To pick winners, operators should select candidates with a clear link between mobile services and the core business, and favor candidates with sound segmentation strategies, and sign long-term, exclusive agreements.'

Forrester conducted the research through in-depth interviews with 30 senior executives at mobile network operators across Europe earlier this summer.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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