On the evidence of last week’s IIR conference ‘MVNO Business & Partnering Strategies’ held in Cannes, France - the first two days of which were chaired by consultant Norbert Sagnard - the mobile virtual network operator (MVNO) business is booming. And a new entity is emerging in the virtual ecosystem to join MVNOs and mobile virtual network enablers (MVNEs): the mobile virtual network aggregator (MVNA).

Sagnard says it is currently estimated that 300 MVNOs have launched across Western Europe, Asia and America, and there is strong interest in the business model from Eastern and Southern Europe, Africa and the Middle East, where MNOs are preparing their wholesale strategy to host the first generation of MVNOs in 2007. The Cannes audience also heard that during 2006, 130 companies in France, 70 in Spain and similar numbers in Germany and the UK had expressed an interest in launching MVNOs, which led one speaker to forecast that the total number of MVNOs would double again by the end of next year.

As distinct from last year’s IIR MVNO event more attendees could look back on 12 to 18 months of real experience. Points of agreement were that it was not easy to become a successful MVNO, that the business model was not simple, and that no quick profit should be expected. Yet the market had moved so fast that an emerging consensus was that it was now possible to talk of ‘MVNO 2.0’ in which mobile network operators (MNOs) were actually starting to make money with their virtual partners.

The Cannes conference also heard that some MNOs are also becoming keener to work through MVNEs in order to quickly ramp up the number of MVNOs accessing their network, which was leading to the birth of a new breed of enterprise - the MVNA. These are entities that combine on their platform numerous MVNOs that will never reach more than a few thousands of customers and that lack the scale to negotiate directly with an MNO. However, the advice to potential MVNOs was to work with one MVNE only, in order to have a clearly identifiable responsible party in case of disputes.

In conclusion, according to Sagnard, the conference participants recommended that for MVNOs to achieve success and sustain it, both MVNOs and MNOs needed to work hard on their partnership and take a long term view, as they faced similar sets of challenges. The critical success factors suggested for MVNOs were similar to those highlighted in 2005: fighting churn, keeping costs low, offering choice rather than low prices only and getting a grip on distribution.
John Williamson