James Middleton

July 2, 2008

2 Min Read
MVNO market 'in good shape' despite US failures

Despite its relatively modest share of the global mobile market, the MVNO (mobile virtual network operator) sector remains robust.

Statistics released by industry analyst and telecoms.com parent Informa Telecoms & Media on Wednesday predict that MVNO subscriptions will reach 150 million worldwide by 2013, with 42 per cent coming from Western Europe.

Overall, MVNO subscriptions are forecast to represent 3 per cent of total global mobile subscriptions by 2013.

Paul Merry, senior analyst at Informa, said that the MVNO sector has been buoyed by the development of sophisticated segmentation strategies developed as a mechanism to survive in highly competitive and penetrated markets.

The variety of approaches taken by new entrant providers, which range from loss leader approaches to using the MVNO model to deliver a full suite of services, creates numerous ways of evaluating and defining success beyond the number of subscriptions captured.

Several sub segments in the MVNO space have developed with specific targeted strategies to reach particular audiences. Merry has identified nine major MVNO service approaches as discount, community, MNO emulation, premium VAS, FMC, advertising and loyalty, enterprise, LBS and telematics.

The analysts anticipates that discount and community orientated approaches will dominate over the forecast period delivering approximately 55 per cent of total global MVNO subscriptions by 2013. Part of the reason for this dominance is the fact that many discount MVNOs are pursuing multiple SIM strategies, a model aimed at capturing market share quickly.

Merry also notes that the challenging environment of mature mobile markets has even seen operators closely following the strategies developed by MVNOs to reach particular segments within customer communities. These ‘micro-segments’ have become viable targets for operators as mobile penetration reaches saturation point and the wholesale model begins to be accepted as a means to reach the final customers in highly penetrated markets.

The analyst believes these factors are combining to create a stable future for virtual operator approaches and provide a strong retort to industry doomsayers who have claimed the MVNO model has failed after highly publicised failures in North America.

Earlier this week, US virtual network operator Virgin Mobile USA acquired rival Helio, the joint venture between SK Telecom and EarthLink. Although Richard Branson’s outfit is recognised as the most successful MVNO brand in the world, Virgin’s US operation has also been taking a hammering of late due to the economic downturn.

Helio, like many of its peers, has also felt the heat. The virtual mobile operator joint venture between Earthlink and SK Telecom was launched in 2006, targeting the affluent youth and MySpace addicts. But the company has struggled to get the rich kids to part with their cash and Earthlink has scaled back its investment in the firm and piled the pressure on SKT.

The Informa report, ‘Future MVNO Strategies: Customer Segmentation and Market Evolution’, is out now

About the Author(s)

James Middleton

James Middleton is managing editor of telecoms.com | Follow him @telecomsjames

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