BOSTON-Radio spectrum is scarce and becoming concentrated in the hands of fewer and more powerful players, according to a new report by Ovum, an independent research and consulting company.
In “Virtual Mobile Services: Strategies for Fixed and Mobile Operators,” Ovum suggests that new ways of increasing competition in the rapidly consolidating mobile market be found, increasing customer choice and enabling new entrants to compete in the market.
“Competition in the mobile market is not delivering lower prices for customers,” said John Matthews, principal consultant at Ovum and author of the report. “Spectrum ownership is an extremely lucrative asset, and the largest mobile operators are exploiting it to turn in extremely high profit margins. But easing access for new entrants will increase competition.”
The report noted current experiments with virtual network operation-such as Virgin Mobile in the United Kingdom-have been successful, but since there are no regulatory requirements for existing spectrum owners to allow others access to their networks, they depend on individual agreements between partners.
Matthews explained that existing operators should see the mobile virtual network operator as an opportunity; an alternative way of expanding into new markets. “The operator who is a big fish at home is often a small fry abroad, making for a neat role reversal,” Matthews noted. “In this situation, everyone benefits from more open access.”
In the longer term, Ovum noted big consumer brands, such as Coca-Cola or Manchester United Football Club, could run MVNOs, allowing a new channel to market for operators with a smaller market share because they could use the partner’s superior branding and marketing capabilities to increase traffic on their networks.
