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Tuesday, June 5, 2012

What is Mobile Virtual Network Operator (MVNO)

Mobile Virtual Network Operator (MVNO) is a mobile operator that does not own its own spectrum and usually does not have its own network infrastructure. Instead, MVNO's have business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers.

To date, MVNO's are mostly a European, GSM phenomenon. With many simple resellers in the United States gaining popularity, it is likely that the concept will catch on in the US and other parts of the world as well for the Mobile Virtual Network Operator (MVNO).

Distinguishing Characteristics of the MVNO

Many are familiar with simple resellers of telecom services such as long distance, local exchange, and mobile network services. In contrast, MVNO's typically add value such as brand appeal, distribution channels, and other affinities to the resale of mobile services.

Successful MVNO's are those that position their operations so that customers do not distinguish any significant differences in service or network performance yet offer some special affinity to their customers. Unlike simple mobile phone deal resellers, who often have little or no brand recognition, MVNO's are typically well known, well positioned companies, with a good deal of marketing clout. For example, Virgin Atlantic Airlines is a MVNO in the UK that uses its market recognition to position itself for selling directly to its airline customers and others.

Successful MVNO's will also be those that have ample financial resources and sufficient agreements with existing operators to provide a good service coverage area. Additionally, well-diversified independent MVNO's can offer a product mix that incumbent mobile operators can not match. For example, grocery store MVNO's could offer a package of MOU's and groceries.

Operational Issues

While MVNO's typically do not have their own infrastructure, some leading providers are actually deploying their own Mobile Switching Centers (MSC) and even Service Control Points (SCP) in some cases. Leading MVNO's deploy their own mobile IN infrastructure in order to facilitate the means to offer value-added services. In this way, MNVO's can treat incumbent infrastructure such as radio equipment as a commodity, while the MVNO offers its own advanced and differentiated services based on exploitation of their own intelligent network infrastructure. The goal of offering value-added services is to differentiate versus the incumbent mobile operator, allowing for customer acquisition and preventing the MVNO from needing to compete on the basis of price alone.

MVNO's have full control over the SIM card, branding, marketing, billing, and customer care operations. While sometimes offering operational support systems (OSS) and business support systems (BSS) to support the MVNO, the incumbent mobile operators most keep their own OSS/BSS processes and procedures separate and distinct from those of the MVNO.

Business Issues

The major benefit to traditional mobile operators cooperating with MVNO's is to broaden the customer base (sell additional MOU's) at a zero cost of acquisition.

It is likely that incumbent mobile operators will continue to embrace MVNO's as a means of deriving revenue to offset the enormous cost of building 3G networks.

As more MNVO's expand in the marketplace, they are likely to first target prepaid customers as a means of low cost market entry themselves.

Most regulating bodies are in favor of MVNO's as a means of encouraging competition, which would ultimately lead to greater choice and lower prices.

With the advent of the MVNO, many incumbent mobile operators will evaluate the opportunity to offer supplementary MVNO services of their own. To do so, exiting mobile operators will use their established branding, service knowledge, and supplier relationships to complete against independent MVNO's.

United States MVNO's (as of February 2004)

MVNO                      Underlying Carrier

9278 Mobile                    Sprint
Air Voice Wireless          AT&T
Boost Mobile                  Nextel
Call Plus                         AT&T
EZ Link Plus                   Cingular
GSR Mobile                   Sprint
JusTalk                           AT&T
Liberty Wireless              Sprint
Locus Mobile                 AT&T
Mobile PCS                   Sprint
Omni Prepaid Cellular    Verizon
Page Plus                      Verizon
STI Mobile                    Sprint
TracFone                       Verizon/Cingular
U Mobile                        Sprint
Virgin MobileUSA          Sprint


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