3GSM: MVNOs remain viable

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Despite the popularity and success of mobile virtual network operators (MVNOs), not all will survive, but data and content services could be the saving grace for many by offering better margins, according to research published today by Analysys.

Popular since the mid-1990s, there are now more than 200 MVNOs worldwide. But new technologies, such as voice over IP (VoIP) over mobile networks, could hurt revenue margins, according to the research consultancy.

"Until recently, most MVNOs were similar and offered no-frills services, often based on prepaid voice at prices undercutting the incumbents' offerings," Emma Buckland, the report's author, said at the 3GSM World Congress in Barcelona today.

"A number of companies have made a success of this business model and there is still scope for it to be used efficiently in some markets, especially by organisations such as large retail groups with well-known brand names."

A key enabler of success for such firms is mandatory network access, which forces mobile network operators to open their infrastructure up to virtual players.

But, according to Buckland, new entries into the MVNO market have found that specialising in data services offers a much better chance of survival.

"Some new MVNOs have shunned the no-frills business model altogether and are concentrating on offering data and content services to niche markets. At the same time, fixed and cable operators are increasingly choosing to extend their service portfolios by using the MVNO model to enter the mobile market," she said.

However, Analysys' research warns that MVNOs specialising in content face an extra challenge as demand for non-message data services is not yet proven in many markets.

The research also found that - with the exception of regulated markets - MVNOs rarely exceed five per cent of market share in terms of subscriber numbers, largely because the most successful network operators are bought up by other telecoms players.

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