Ryanair Telecom to enter mobile market

11 Mar 2004

Ryanair Telecom has joined the growing number of telcos that have expressed an interest in becoming mobile virtual network operators (MVNOs) as soon as the Commission for Communications Regulation (ComReg) puts the necessary structures in place for national roaming and a code of practice for existing network operators who will host the MVNOs in the future.

Speaking at this month’s First Tuesday, which took place in Dublin on Tuesday evening, Ryanair Telecom boss Sean McVeigh said that the aspiring telecoms company is on track to deliver cheap phone calls to consumers in Ireland, Spain, the UK, Germany, Belgium and France and is keen to become an MVNO in at least two countries this year.

An MVNO is a company that provides mobile services on the back of an operator like O2 or Vodafone’s existing network.

Also at the recent First Tuesday event was Oisin Fanning of Smart Telecom who said that his company was also keen to enter the MVNO market space as soon as the market structures were available. Both Smart and Ryanair Telecom join Esat BT as companies that have expressed an interest in entering the MVNO marketspace. Another possible entrant is Eircom, whose moratorium on re-entering the mobile space following the sale of its Eircell mobile division to Vodafone three years ago ends in April.

Possible patterns to the identity of the first batch of MVNO service providers could be seen through the fact that Esat BT, which is engaged in building Hutchison, or 3’s, 3G network as part of a €100m contract, has declared its ambition to be an MVNO. Huchison, or 3 is obliged under its A license to host an MVNO service and according to ComReg could be in position to do so within the next three to six months.

McVeigh commented: “We are interested in entering the mobile space because we believe that prices in this space are enormously excessive. We are focusing on going into a number of European countries in this way with the lowest mobile rates possible. We are interested in pursuing the German model of blurring the lines of fixed and mobile billing. I would see that as a big trend going forward. We are waiting on ComReg to pave the way. An MVNO strategy is the next big thing for us.”

However, according to reports from the UK, Ryanair Telecom has decided to delay the launch of its mobile services because take-up of its new fixed line services have been better than expected. The no-frills telecom provider opened for business last month and according to its website will be ready to launch a special “travel SIM” service this month. The service is aimed at cutting the roaming costs incurred by travellers.

At the end of January, ComReg declared that both O2 and Vodafone have 95pc of the Irish mobile market and therefore had significant market power and began a consulting process with the view that both Vodafone and O2 should be obliged to carry other service providers like MVNOs and that measures should be put in place to create a wholesale element to the Irish mobile market. The outcome of the consulting process will prove vital following the closure three years ago of Cellular 3’s Imagine.

Cellular 3, under the Imagine brand, acquired bulk airtime from Eircell and then began to operate as an MVNO, quickly amassing 20,000 customers, through its own brand and through associates like Spirit. Eircell’s decision to stop the service resulted in a High Court case. The court ruled that despite having 64pc of the Irish market, Eircell was not in a dominant position and was right to protect its position. Cellular 3 closed for business with the loss of around 240 jobs.

Present on the night was the chairman of ComReg John Doherty who commented: “In terms of 3G, Hutchison, under the obligations of having the A license, once it has reached a certain rollout point will be obliged to host an MVNO provider. Our proposition to the market is to intervene and provide for national roaming agreements between operators and pave the way for the introduction of MVNO services. That is the direction that ComReg is going in. Under the obligation of the A license, the first MVNO services should be provided for within three to six months.”

By John Kennedy