There has been a notable surge in the number of MVNO (mobile virtual network operator) players worldwide in the past two years. However, with falling revenue margins for MVNOs, not all of these ventures will survive, according to mobile industry analyst firm Analysys.
Analysys said that at present there are more than 200 MVNO operators worldwide but not all of these will be successful.
In Ireland, next summer will see retail giant Tesco launch Ireland’s first MVNO since 2000 as part of a partnership with O2.
Analysys said the future holds a number of challenges for existing and would-be MVNO players with new technologies such as voice over IP (VoIP) over cellular networks impacting the prospect of high-revenue margins from mobile.
The firm’s report found that mandatory network access by regulators is a key enabler of MVNO success, particularly in the voice market.
However, outside of regulated markets MVNOs rarely enjoy a market share of more than 5pc in terms of subscriber numbers. There’s also a trend that successful MVNOs get bought by existing telecoms players, said Analysys.
MVNOs specialising in content provision also face significant challenges given that demand for non-messaging data services remain unproven in most countries.
“Until recently, most MVNOs were similar and offered no-frills services, often based on prepaid voice at prices undercutting the incumbents’ offerings,” the report lead author Emma Buckland said.
“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.
“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,” Buckland said.
By John Kennedy
