MVNO sector in resurgent mood - Report

MVNOs around the world will have a total of 133 million customers by 2011, roughly 4.5 per cent of the total mobile market, according to Telecoms.com’s parent, Informa Telecoms & Media.

In its latest report, ‘MVNO Strategies and Forecasts to 2011: Evolving Opportunities in the Global Telecoms Marketplace,’ the analyst group contradicts recent bad press the MVNO sector has received and points to a resurgence.

The analyst says that press reports of the MVNO sector being “a business in crisis” with several high profile market exits, including ESPN in the US, have been identified as harbingers of the death of the MVNO business approach. However, this is an over-simplification of the issues according to Paul Merry, senior analyst with Informa and lead author of the study. Merry told Telecoms.com: “The MVNO opportunity was over-hyped and is now experiencing the classic reaction to hype, a backlash.”

The report looks at some of the highly public MVNO failures and argues that many basic features required for a successful telecoms service were not put in place. In ESPN’s case, Merry’s team assert that the company failed to adequately differentiate itself from the existing mobile network operators and its service mix relied upon recycling the content from its main platform – television – rather than developing content that is unique and relevant to the mobile platform.

Merry explained that “customers simply could see no advantage in switching their service providers. It was not the business model itself that was the problem but rather the implementation of it”.

Merry believes there are a number of core attributes MVNOs must take advantage of in order to succeed. “As an MVNO has no infrastructure, it can cost-effectively target consumer segments that the network operators might not. Moreover it can afford to target some of the more niche specialised requirements of the customers that generate premium revenues. The long-term potential of MVNOs lies in this type of targeting,” Merry said.