The fall and rise of mobile virtual network operators








In June last year, Virgin Mobile ended its association with Qtel as an MVNO, after almost a year of operations in Qatar, and after laying the foundations for MVNO growth in the Middle East.





In February this year, South Africa’s smallest GSM operator, Cell C sold its 50 percent stake in Virgin Mobile to Virgin Group, UK, ending hopes of the country’s first-ever MVNO.





Last week, Tata Teleservices said it plans to discontinue its alliance with Virgin Mobile for the latter’s MVNO operations in India, crashing India’s controversial, yet first and only MVNO till date. According to TTSL, this move was decided due to brand restructuring, which consisted of concentrating more energy on Tata’s GSM arm – Tata DOCOMO, using the spectrum formerly given out to Virgin Mobile. While this move may be a reason for recent rumoured staff exits at Virgin Mobile and Tata DOCOMO in India, the rise and fall of the MVNO concept should be further highlighted.





The launch of Virgin Mobile’s network in March 2008 became a subject of heated controversy, as MVNOs were not permitted in the country at that time. Thus, the Virgin Group sold its 50 percent stake back to the Tata Group this April, after signing a five-year brand name royalty agreement for the continuation of the youth-popular Virgin Mobile brand in India.





Last year, Tata Teleservices also tied up with Kishore Biyani-led Future Group to jointly launch T24 mobile telephony services on the GSM platform, which would provide free talk time and other bonus vouchers to shoppers at any of the Future Group retail outlets, after they signed up for a T24 SIM card. Till date, both TTSL and the Future Group deny that this association is anything more than a retail partnership, although it has all the makings of an MVNO. T24 is still popular in metros and rural areas all around India today.





Ad-funded MVNO Blyk, which tied up with Aircel for youth-based apps, was also set to enter the Indian market as an MVNO, but this did not pan out due to regulatory issues.





However, in April this year, TRAI finally recommended the introduction of MVNOs under the unified licensing regime. According to the telecom authority, a unified licensee who does not possess spectrum should be allowed to work as an MVNO in any licensed service area and the telecom body also recommended that there should be no restriction on the number of MVNOs attached to an operator. However, an MVNO should not be attached to more than one operator in the same service area, and in case it is allotted spectrum for acquiring subscribers, it ceases to be an MVNO.





At one point of time, it was felt that MVNO would be the next strategy for greenfield operators who failed to garner 3G spectrum. However, till date, there has been no conscious move in the Indian telecom industry on the MVNO front.





According to forecasts by research agency Ovum, global MVNO connections are forecast to increase from 52.6 million in 2009 to 85.6 million in 2015. Emerging markets like India, Pakistan and Vietnam are expected to lead APAC MVNO markets, with revenues from that region expected to reach approximately $980 million by 2015, displaying an increase of 10 percent from 2010.





So far, while India is yet to officially launch its first MVNO, Pakistan’s steep MVNO license fee of $5 million seems to have scared way potential MVNO’s for the moment. In Vietnam, the MVNO market has been semi-active since 2009, when MVNO licenses were given out. Dong Duon Telecom, Vietnam Multimedia Corporation, and EVN Hanoi are some of the popular MVNOs in that country.





In April this year, EVN Hanoi and Indochina Telecom signed a co-operation contract to jointly develop and share the network infrastructure in Hanoi. Indochina Telecom, which holds a MVNO license for Vietnam is yet to roll out services in Vietnam, and has now been given a deadline of mid-August to do the same.





Bundling of mobile data with fixed line plans is a popular strategy for the success of most global MVNOs, and is still being followed in some permutation or combination in the US, Europe, Australia and New Zealand, which all have successful MVNO operators today, working alongside the full-service operators. A unique characteristic of the European market is that of telecom vendors like Huawei also aiding in the MVNO expansion.





In the Middle East, MVNO Friendi Mobile is the most popular, having launched operations in Oman – which incidentally has the maximum number of MVNOs in this region, and plans to extend its operations to 10 other countries in the Middle East shortly. Nonchalant to its recent Qtel snub, Virgin Mobile is also keen to start MVNO operations in Oman, Jordan, Israel and Saudi Arabia in the Middle East region. Telecom Egypt is also looking at getting its first MVNO license for the country by the year-end.





The concept of MVNOs has for long been viewed as a double-edged sword, seeking to provide subscribers with more choice and operators with more revenue via network-sharing agreements. However, full-service operators, especially in emerging nations are yet to come to terms with increased competition, low tariffs and rock-bottom ARPUs in extremely price-sensitive telecom markets that could be further accentuated with the entry of MVNOs. Fortunately, the icy dilemma seems to be thawing, with most telecom regulatory bodies agreeing that MVNOs are the only way forward to be on par with the rest of the world, technology-wise and choice-wise. What remains to be seen is whether the data boom caused by MVNOs abroad, can help boost mobile data usage in emerging nations as well.






By Beryl M



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