As loss-making Vonage gets ready for its day in court with US telco Verizon in their patent dispute (click), NewsWeek speculates that the VoIP company may be plotting to set up as a mobile virtual network operator (MVNO). If correct, is this timely piece of diversification or a desperate last throw of the dice?

Whichever, the road to MVNO happiness is a long and winding one according to a new report from the Analysys consultancy. The report – ‘Strategies for MVNOs’ - says there are now more than 200 MVNOs worldwide but cautions that not all will be successful. In addition, says Analysys, the future holds a number of challenges for existing and would-be MVNOs, with new technologies, such as VoIP over cellular networks (cue Vonage?), further reducing the prospect of high revenue margins in the mobile market.

“Until recently, most MVNOs were similar and offered no-frills services, often based on prepaid voice at prices undercutting the incumbents’ offerings. A number of companies have made a success of this business model and there is still scope for it to be used efficiently in some markets, especially by organisations such as large retail groups with well-known brand names”, says the report lead author Emma Buckland. “However, some new MVNOs have shunned the no-frills business model altogether and are concentrating on offering data and content services to niche markets. At the same time, fixed and cable operators are increasingly choosing to extend their service portfolios by using the MVNO model to enter the mobile market.”

Analysys also reckons that, except in regulated markets, MVNOs rarely enjoy a market share of more than 5% in terms of subscriber numbers, not least because very successful MVNOs often get bought by existing telecoms players.
John Williamson