Telecoms upstart mulls MVNO opportunity


6 Jan 2005

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Pin on PinterestShare on RedditEmail this to someone

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Pin on PinterestShare on RedditEmail this to someone

Telecommunications start-up Buytel, previously known as Ryanair Telecom, has told siliconrepublic.com that its decision to enter the Irish mobile market will be influenced by the success of its Travelfone roaming service that was launched before Christmas.

Buytel boss Sean McVeigh (pictured) told siliconrepublic.com yesterday that the company launched its Travelfone service before Christmas to a pan-European audience. The company was previously known as Ryanair Telecom as part of a branding agreement with Ryanair and has made no secret of the fact that it intends to do exactly to the telecoms sector what Ryanair did to the airline business.

Under the Travelfone roaming service, individuals travelling for leisure or business purposes can call a landline anywhere in the world for 49 cents and can receive calls for 39 cents. Users simply order the service from Buytel and are equipped with a Siemens A65 tri-band mobile phone and a SIM card.

McVeigh said his company has struck roaming deals with more than 100 telecoms operators worldwide to ensure the low roaming rates.

“The service is beginning to get some traction and depending on how it does we will consider opportunities in the European mobile virtual network operator [MVNO] sector,” McVeigh told siliconrepublic.com.

MVNOs – companies that offer mobile services on the back of the infrastructure of an existing mobile operator – are enjoying widespread success across Europe. In the UK Virgin Mobile is planning an initial public offering (IPO) based on its success in the UK marketplace. However, in Ireland the country’s first MVNO, Cellular 3, was effectively pushed out of the marketplace by Eircell. 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 such as 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.

While the MVNO trend is spreading across Europe on the back of the Virgin Mobile success, and traditional firms such as Tesco are becoming MVNOs in their own right, the Irish market will present a difficult market for a new player to crack. Between them, just two operators, O2 and Vodafone, have 94pc of a market that has reached 89pc population penetration.

Last year, siliconrepublic.com reported on how McVeigh’s company – as well as Smart Telecom, Esat BT and Eircom – were considering opportunities in the MVNO space. At the time McVeigh said: “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 [Commission for Communications Regulation] to pave the way. An MVNO strategy is the next big thing for us.”

Last month, McVeigh’s expectations were realised when ComReg decided that the Irish post-paid mobile market is stagnant and lacks serious competition. In a bid to shake up the market ComReg has instructed both operators to allow for the hosting of mobile virtual network operators (MVNOs), a move it says will translate to a 25pc reduction or more in call costs for Irish mobile users. ComReg came to its decision following a comprehensive analysis of the Irish mobile market and has notified the European Commission on its decision. The regulator has also ruled that existing national roaming agreements between operators should remain in place.

McVeigh’s company, based in Dun Laoghaire, changed its name from Ryanair Telecom to Buytel after forging an agreement with voice verification technology firm Voice Vault, which previously went by the name Buytel. “We decided that Buytel was a strong name for a telecoms firm and came to an arrangement with Voice Vault. We sell phone cards on Ryanair flights and Voice Vault does the voice verification for us,” McVeigh told concluded.

By John Kennedy