BUCHAREST, Romania-Mobile virtual network operators (MVNOs) are a new and hopeful concept in the European communications market. The region’s mobile market is growing, with strong potential for new operators.
The largest problem faced by European operators hoping to break into new markets is limited available spectrum. In addition, it is difficult to compete in a market with three or four existing competitors.
Some customers may not be pleased with their current operator services, and MVNOs are stepping in to find those subscribers. In fact, MVNOs could play a large role in future third-generation (3G) markets.
According to Ovum, a London-based consulting company, an MVNO is an organization that offers communications to customers with its own mobile network code; issues its own subscriber identity module (SIM) card; and operates its own customer care center, including home location register. However, MVNOs do not have their own radio frequencies or licenses.
An MVNO would not have a license to use radio spectrum, but it would have access to the radio networks of one or more mobile operators and would be able to offer subscriptions and call services to its customers.
MVNOs attempt to attract new customers to their own virtual networks by offering more and expanded services compared with standard mobile network operators due to the use of intelligent network (IN) technology. MVNOs also often can offer lower retail prices than standard operators, depending on the terms and conditions established between the MVNOs and mobile operators for connection and use of networks for national and international calls.
An MVNO offers its customers SIM cards, which contain information identifying the user, along with the international mobile station identity (IMSI) code. The IMSI code is made up of 15 digits-the first three identify the country to which the SIM card belongs, the next two identify the network issuing the SIM card and the last 10 digits identify the specific customer.
The success of MVNOs is largely dependent on whether the traditional mobile operators are interested in cooperating with them. In general, if traditional operators are not using all their available spectrum, they are losing money. So operators can sell available air time at a small price to virtual operators, making money every time a call is made.
One issue facing both traditional operators and MVNOs is whether they have enough telephone numbers to allocate to subscribers. An MVNO sells SIM cards under their brand names using numbers from the traditional operator with which it has an agreement. If the customer base increases more than expected, the SIM numbers limit the number of new subscribers. The solution is to gain a mobile license in a country where the potential for numbers can increase from a few thousand to a couple of million.
The leading countries in the MVNO market are Norway, Sweden, Finland and the United Kingdom. The principal MVNO players are Sense Communications, Mobyson, Virgin and Mint Telecom. The majority are currently playing the virtual mobile game within their country of origin, but almost all plan to expand internationally.
The United Kingdom is a country with an open communications market, and many MVNOs will appear in the United Kingdom in the future. Rumors that six companies are planning MVNO services in the United Kingdom have circulated.
Mint Telecom, based in the United Kingdom, has agreements with almost all the countries that have GSM 900 MHz, 1800 MHz, or 1900 MHz systems. It has MVNO agreements with 220 operators around the world for both cellular and satellite services. The company also has an agreement with U.S.-based Nextel Communications for its digital dispatch and cellular system based on iDEN technology from Motorola.
Mint Telecom also is part of a consortium gaining a license in Iceland. The company intends to expand its facilities to Eastern Europe with a new hub to be deployed in a country with good fiber capacity within the country and with surrounding countries, according to Adrian Wood, the managing director of the company.
Virgin Mobile, which is well known due to its founder Sir Richard Branson, also is expanding through the world. It has joint ventures in Australia with Cable & Wireless Optus, in Singapore with Singapore Telecom (SingTel) and in the near future in the United States.
According to Steven Day, head of media relations for Virgin Mobile, the company plans to act in the future as a 3G MVNO, hoping to compete with traditional UMTS operators delivering this new service.
MVNOs are dependent on the ability to interconnet with traditional mobile operators, but this is not always the case. In early 1998, the Sense company requested access to interconnect with the Sonofon mobile netwok from Denmark. Sonofon refused access on the grounds that recognition of another organization’s SIM card is known as roaming, and a roaming service is not an interconnection. In mid-1998, the Danish National Regulator Authority (NRA) was aked to solve the dispute, and in early 1999, the agency decided Sonofon must interconnect its network with Sense. The case demonstrates the strong role regulators play in spreading adn developing MVNO services.
Mobyson is another kind of virtual operator addressing specifically mobile users between the ages of 17 and 32. According to a company statement, Mobyson is convinced the various forms of mobile applications, such as pictures, texts and games, will drive the development of the mobile Internet, just as e-mail drove the exponential development of the traditional Internet. The mobile phone will become a unique communications tool with the mobile Internet. In the future, mobile customers will see little differnece between traditional mobile operators and MVNOs.
“As far as customers are concerned, MVNOs are the same as any other operator,” said Day.
According to a report from telecom consultancy Analysts, MVNOs will accelerate the mass market take-up of 3G services, but regulators will have the final word.
