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  MVNO - mobile virtual network operator

Mobile Virtual Network Operators (MVNO) provide mobile telephony services to users while neither owning nor operating their own network.

Unlike Resellers, who sell pre-packaged services defined and delivered by the Network Operator, and Service Providers, who offer a distinctive brand and control customer care, the MVNO also has a high degree of control over service design and tariffs.

  The MVNO exploits very low sales and marketing costs to enroll a large and loyal community of mobile phone users, with low-churn because of brand loyalty. In turn the MVNO services users by contracting to buy bulk spare capacity at discount rates from a network operator.

Working with an MVNO can be profitable for a network operator with substantial spare capacity on their network. They have only to ensure that the additional income from the MVNO exceeds the net income they could achieve by their own efforts. This analysis has to account for the risk of excess cannibalisation of the network operator's own existing customer base compared to cannibalisation of competitor's customer bases.

Becoming an MVNO appeals to companies, like supermarkets, who have substantial brand recognition in relatively low margin businesses. They only have to ensure that the income they achieve net of relatively low set up and operating costs delivers a better margin than the average for their overall business.

  MVNOs have become a key feature of second generation mobile phone systems and are likely to be key to the early success of 3G systems where massive capital investments will create relatively lightly-used networks for some time to come. However the ability of 3G systems to deliver information and entertainment content should motivate a wider range of MVNO deals.
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Should you consider being a MVNO? ask us:


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