Introduction to MVNO

1. Introduction to MVNO
Private & Confidential property of Shilpin Pvt. Ltd.
www.shilpin.in

2. MVNO
 Index
o
o
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o
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Concept
Definition
Formation of MVNO
MVNO and other Players in Market
Types of MVNO
Generic Model of MVNO
Opportunities and Risks
Case study : - ESPN mobile
- Virgin mobile India

3. Concept
• Mobile Virtual Network
Operators:
Introducing the business concept
of
"One doesn’t need to
own a cow to milk a
cow”
What is an MVNO?
 An MVNO does not own spectrum, it
leases it from a network operator with
whom it has a relationship
 An MVNO supplies the SIM card and
has full control over its subscribers and
handles its own billing
 An MVNO buys network capacity, usually
as close to the base level as possible, and
invests in a service infrastructure of its own
 The MVNO thereby establishes a more
independent position and is able to
compete directly with other mobile
network operators in the market by
offering advanced services

4. Definition
US Federal Communications Commission
Resellers offering service to consumers by purchasing airtime at wholesale rates from facilities-based
providers and reselling it at retail prices
European Commission
A mobile operator, which does not have a license to use radio spectrum, but has access to the radio
infrastructure of one or more mobile operators and is able to offer services to customers using that
infrastructure and its own network
Industry Analysts
An arrangement where a network operator acts as a wholesaler of airtime to another firm, which then
markets itself to users just like an independent operator with its own network infrastructure
Study Definition: Companies that buy network capacity from at
least one mobile network operator in order to offer their own
branded mobile subscriptions and value-added services

5. Formation of MVNO
 An MNO does not have the content and applications to succeed in a wide variety
of services.

6. Formation of MVNO
contd…

7. MVNO and Other Players in Market
 Different Players:
– MNO
– MVNO
– Service Provider
– Reseller
Y
N
Service
Available
Service Not
Available
Service
MNO
MVNO
Service Provider
Reseller
License and Infrastructure
Y
N
N
N
Customer Base
Y
Y
Y
Y
Customer Services
Y
Y
Y
N
Y
Y
Y
N
Roaming Agreement
Y
Y
N
N
Routing Mechanism
Y
Y
N
N
Instrument/ Sim
Y
Y
Y
N
Customer Billing

8. Types of MVNO:
 Various MVNOs network and operational components:
AUS
Base stations and transceiver
equipment that provides access to
spectrum
All network elements apart from the
access network, including switching
and transmission, home location
registers (HLRs), intelligent network
platform, etc.
Full MVNO
Enhanced MVNO
Basic MVNO
UK
Access Network
Core Network
All activities and equipment aimed at
the design and provision of services.
Service Platform
All activities and equipment that are
required to design and implement the
pricing policy and billing options.
Pricing and Billing
Activities relating to after-sale
customer care
Customer Care
Marketing, sales and customer
acquisition activities
Marketing Sales

9. Generic Model of MVNO

10. Opportunities
 Participating in mobile boom
 Differentiate and expand own services
 Covering a niche which MNOs do not serve
 Developing a sustained customer relationship
 Distribution of own content
 Cross selling to existing customer base
 Leveraging own distribution network
 Leveraging existing strong brand

11. Risks
 MVNO introduces additional competition into the market.
 Network quality level cannot be controlled
 High customer acquisition cost if no brand and distribution available
 Network operators will prioritize their own subscribers above those of an
MVNO if bandwidth is a limiting factor, this could lead to non-renewal of
an MVNO agreement in order to recoup the network capacity

12. ESPN Mobile
•
Launched in February 2006,
•
Parent company: Walt Disney Corporation
•
MNO: Sprint
•
Offer: Sports information services
•
Brand value: high
•
Telecom experience: none
•
closed in September 2006
•
Reasons for closure: insufficient subscriber growth
•
Main contributors to failure:
–
–
–
•
High prices of handsets
Insufficient service differentiation
Technical limitations of video download
Re-launched by Verizon in May 2007

13. ss
•
On 1st March 2008, Virgin Mobile has entered the Indian Market,
Virgin is primarily an MVNO company, and retail distribution is only
a part of the overall strategy.
MNO: Tata Teleservices.
•
Brand value: high
•
Telecom experience: 15 million customers over 4 continent.
•
Virgin India Strategy : Target Segment - Urban Youth
- There are more than 215 million Indians aged between 14 25 years old. Over the next three years, this
segment to be adding over 50 million new youth subscribers.
- Focus exclusively on a single segment and by continuing to
deliver innovative services that cater to this segment's
distinct needs.
•
Sales Objectives :
- Revenues of Rs. 35000 Crores by 2011
(including connections, handsets and accessories)

14. Strengths
–
Strong Global Brand
–
Limited overlap with Tata’s existing customers
–
–
–
Very low fixed costs as it leases Network Time
Not tied to a particular Technology
Threats
–
Lack of number portability - switching barriers
–
Unclear Government Policy on MVNO
–
Limited 3G services
–
Falling Handset prices - lower margins
–
Non serious image may not go well with conservative Indian consumer.

15. MVNO
Abbreviations
 MVNO- Mobile Virtual Network Operator
 MNO- Mobile Network Operator
 SP- Service Provider
 SIM Cards- Subscriber Identity Module Card