 | Issue: | North America 2006 |
| Article no.: | 11 | |
| Topic: | The MVNO era of mobile innovation | |
| Author: | Stephan Ouaknine | |
| Title: | President and CEO | |
| Organisation: | Blueslice Networks | |
| PDF size: | 1213KB |
About author
Stephan Ouaknine is the President, CEO and Founder of Blueslice Networks. He brings extensive experience in bridging the gap between marketing and development as well as in international marketing, finance and telecom. Prior to founding Blueslice, Mr Ouaknine was Founder and CEO of Airslide Systems, a world leader in SS7/IP and SMS Offload Smart Signaling Solutions for mobile carriers. Before the birth of Airslide, he was a member of the founding team at Emblaze (BLZ: LSE) and held the positions of Executive Manager in charge of Business Development as well as Marketing and Sales Director. Mr Ouaknine helped take the company public on the London Stock Exchange. Born in Montreal, Canada, Stephan Ouaknine graduated from McGill University with a Bachelor Degree in International Relations.
Article abstract
Mobile Virtual Network Operators (MVNO) have no networks, lease wireless capacity from existing mobile service providers and re-sell services under their own brand name. They have little investment in technology to protect, but must differentiate themselves from the competition. They tend to be innovative and aggressive competitors. MVNOs are pioneering fixed/mobile convergence or FMC. FMC combines the low cost of wireless (WiFi, WiMAX) with the ubiquitous access of mobile telephony and liberates network resources to provide advanced services.
Full Article
The mobile world is changing. The new mobile world includes new service providers, new revenue-generating services, and multiple access networks and places the subscriber in the centre of the network. The cellular phone in the subscriber’s hand has been transformed into a mobile device – liberated from concerns about access technology — injected with the user’s personality, pushing relevant information to the user, and keeping the user connected. These devices are very personal; they accompany nearly three billion people in their daily lives. Meanwhile, voice ARPU (average revenue per user) is declining due to competitive pricing pressures and market saturation. Mobile service providers have been scrambling to deliver the next killer application. The infamous search for the killer app has taken the path from voice to SMS (Short Message Service), back to voice, to MMS (Multimedia Messaging Service) and WAP (Wireless Application Protocol), and ultimately back to voice. The truth is that there is no one killer app. The search for killer apps is now the job of a new variety of players, the MVNOs, or Mobile Virtual Network Operators. Just as Disney knows kids and ESPN knows sports fans, their focus on a niche market allows these operators to know their customer and potentially deliver greater success for value added features. This new breed of mobile service provider is just the right vehicle to drive the discovery of successful revenue-generating applications – they are fierce, innovative, and lean enough to do it. Consumers are benefiting from new options and service alternatives, and carriers that embrace the change are experiencing record successes. A new kind of mobile service provider The MVNO has emerged as a highly successful business model and is transforming the wireless industry. Operators no longer need a licence or full network to compete in the mobile marketplace. What started as a reseller model in Europe is now spreading to the rest of the world, as companies focused on communications — and companies with well-known brands, but no prior connection to telecommunications see the opportunity to tap into this simple and extraordinarily expanding market. The new MVNO model The MVNO model is shifting from enterprises focused upon marketing to mobile service innovators. The first generation MVNO began as a simple reseller of mobile service, piggybacking on a carrier’s network. With this model, the MVNO relies on the carrier for network access, call completion and roaming and, as such, cannot differ much in services. A reseller MVNO is responsible for customer acquisition, marketing, and customer care. Reseller market saturation is driving players to adopt a more complete MVNO strategy based on service differentiation. A full infrastructure MVNO, or Enhanced Service Provider, owns some key infrastructure elements like switches, Home Location Register (HLR), CRM (customer relationship management), billing and service platforms. The full infrastructure MVNO model still relies on the carrier’s radio spectrum, but is less dependent on the carrier’s network, and as such can control calls and service opportunities. When a full infrastructure MVNO enters the market, it becomes harder for resellers to enter or maintain their position in the same market. Full infrastructure MVNOs generally focus on greater minute and data usage, higher ARPU, and rich services, boosting revenues not only for the MVNO but also for the host carrier. As a greater number of full infrastructure MVNOs enter the market and scale up, it will be harder for reseller MVNOs to compete. There will be less focus on voice-minute pricing pressure, and more on service differentiation. The importance of differentiation for MVNOs In an increasingly competitive market, MVNOs need to differentiate by building an independent network platform to stand out from other MVNOs and, as well, from their carrier partner(s). MVNOs are ambitious and nimble enough to lead innovations in mobile telecom and they have no legacy investments to defend. There is a new ecosystem of vendors, carriers, MVNOs, and content providers supporting this means of innovation. A successful MVNO strategy for carriers A new breed of operator is taking the risks and leading mobile telephony innovation; this is excellent for both carriers and consumers. Mobile carriers are increasingly allowing MVNOs to cut network deals because they are realizing the benefits and seeing carrier success stories. No one operator can do all things for all people. Deals with next generation MVNOs help the carriers to access niche market segments they are unable to address completely and subcontract the search for the killer app to mitigate their risks. An MVNO serves as a hedge for carriers, since they provide a risk-free way to test new markets and service offerings. MVNOs can test the waters with value-added services and find successful services, which the carrier can subsequently replicate. According to the first generation reseller MVNO model, operators were the first to market with new products, services, and technologies; MVNOs had to bargain to obtain those services after launch. With the evolution to full infrastructure, MVNOs are now able to launch these services independently. Beyond that, an MVNO driving greater usage, especially data usage, builds greater revenues, greater customer loyalty and lowers churn rates for the carrier. The MVNO absorbs much of the operator’s marketing costs, making MVNO subscribers almost pure profit for carriers. The new mobile market The telephony landscape has recently been shifted by competition from broadband and VoIP, and a plethora of new players now offer telephone service over the Internet. Some VoIP service providers, looking ahead, are offering a wireless version of VoIP using Wi-Fi networks to provide a mobile, although limited, voice service. However, as cellular access is currently the most robust way to provide ubiquitous mobility, cable companies, VoIP players and quadruple play (a combined voice, video, data and wireless service) hopefuls are moving into mobile as MVNOs. This is their way into the wireless sector. Further, by converging VoIP and cellular services into a seamless network, they can leverage their telephony brand and their existing infrastructure to differentiate themselves in the market through the offer of ever more sophisticated services. MVNOs focused on such features can lessen the risk of commoditization and price-based competition. Inflection point in telecom culture – the necessity of convergence It’s not a war between WiFi, 2G, 3G, and WiMAX. The coexistence, and unique advantages of each, only confirms the necessity for convergence between these technologies and the need to consolidate and seamlessly let the subscriber use whichever form of access is most convenient or cost effective at the moment. The new mobile subscriber is now at the centre of a multiple access world. In the short term, fixed/mobile convergence (FMC) solutions will immediately provide mobile networks with two important benefits. First, it will alleviate traffic on cellular networks and facilitate cheaper voice calls. Second, it brings the sophisticated IP-based services to which consumers are accustomed in the broadband world. In the long term, the seamless crossover between all wireless access technologies will permeate all communities of municipal and personal access nodes. The disruption and opportunity of bridging WiFi and cellular Dual mode cellular and WiFi devices are currently on the market and mass-market deployment should occur within a year. WiFi stations are everywhere and municipal WiFi deployments will bring great growth in wireless broadband access. The first benefit of FMC, voice call roaming over multiple access networks, frees capacity on cellular networks and reduces call costs; the problem with WiFi hotspots, however, is the ‘dead spots’. Although WiFi offers great speeds at low cost, as soon as you leave the coffee shop, office, home, or airport, your call or connection is lost. Cellular, on the other hand, provides ubiquitous access to coverage out on the street. Bridging both networks brings together the advantages of both. Full-scale call roaming includes features such as dual mode authentication, presence and availability, preferential call routing and seamless handoffs across multiple caller identities. Solutions that provide only some of these features are already being deployed. However, the real future of WiFi/cellular convergence is as a platform for enhanced services. FMC is a preview of services soon to come. FMC, primarily implemented to offload escalating traffic, facilitates the deployment of new, revenue-generating applications. Since there is less risk and cost building and deploying services on an IP platform, success and return on investment are easier to achieve. Consumers can create consolidated identities for both their mobile and PC lives. Features such as interactive gaming, content delivery, user-driven web 2.0 communities, streaming video, high-quality audio, location-based services, and Push-to-Talk, can be provided on WiFi networks and subsequently expanded to mobile narrowband. By creating these identities and these communities, consumers become loyal to their operator. The unique positioning of MVNOs to lead FMC While the carriers are planning their own convergence solutions and IP Multimedia Subsystem (IMS) migration paths, MVNO are leading the implementation of FMC today. An MVNO is not concerned with eroding revenue from legacy networks as the carriers are. An MVNO needs to differentiate, and now that the new model MVNO finds itself independent from the carrier, it can drive innovations such as FMC autonomously, and not simply resell carrier-deployed features. The once simple reseller is now becoming the convergence MVNO, a global MVNO, a content MVNO, and a social network MVNO. MVNOs breaking down borders The new breed of MVNO is going to turn the mobile world on its head. It will change how people look at their mobile device, and it will remove barriers for accessing information. Mobile consumers want a device that they can use seamlessly around the world, across multiple access technologies, with a slew of new services, from a brand that matches their personality. The power of mobile lies in its ubiquity — and the ability to act immediately upon whim, for interaction or access to information. By spanning multiple access technologies and consolidating IP and mobile identities, convergence as currently led by MVNOs does not just add something — it changes everything.
