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Manufacturing communication infrastructure
News Release from: Logan Orviss | Subject: Telecom consultancy
Edited by the Manufacturingtalk Editorial
Team on 08 January 2007
Logan Orviss examine the MVNO model
For developing markets MVNOs are a big opportunity to increase penetration rates rapidly
The MVNO model (Mobile Virtual Network Operator) - 2006 brought debates over MVNOs with industry pundits disagreeing on the merits of the model Can developing and developed markets both provide an arena for MVNOs?
This article was originally published on Manufacturingtalk on 24 Aug 2006 at 8.00am (UK)
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Not the end of the MVNO model, says Logan Orviss International
According to Logan Orviss, "For developing markets MVNOs are a big opportunity to increase penetration rates rapidly, and with minimal 'canibalisation'".
"MNOs in growing markets are usually not able to cover all market segments at a time".
"In such environments, MVNOs can help grow the market as a whole and thus also create value for the MNO(s) by extending the number of potentially reachable mobile users and increase network traffic (assuming that network capacity is not an issue)".
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"Additionally, the MVNO model can allow the MNO to achieve greater stability in the forward projection of its revenues, which can be important to shareholders".
"There is no evidence that prepaid to postpaid migration (which achieves the same objective) will be a short term reality in high growth markets".
"There is a lot of pressure on mobile operators in the saturated markets of Western Europe and the US.
In developed markets, MVNOs provide an opportunity to increase revenues and margins with innovative and more service-oriented business models than many MNOs are capable of providing".
"Adding traffic from MVNO(s) can also allow the dominant MNO to further increase its network utilisation even when its direct market share has reached the maximum level allowed by local regulation".
Communities of interest: With user-generated content becoming the new battleground for innovation, should MVNOs consider targeting specific user communities? What sort of communities could support an MVNO?.
Logan Orviss says, "the answer is definitely yes! MVNOs are already doing that - and successfully".
"Communities like lifestyle, special interest groups, fan groups, health, sports, music, etc".
"would be ideal targets and could support such kind of MVNOs".
"However, a mindset shift is required to separate the business models necessary for communities of interest, typically service provider-led and driven by 'pushed' services, from those required for affinity groups, where the groups themselves determine key issues such as membership, security and profiling".
"In both cases the opportunities to drive up data revenues for the MVNO (and the underlying MNO) are strong - in Japan there are already examples of mobile data ARPUs above Euro25".
Tower of Babel - The dawn of a single device is fast approaching in the UK with the promise of a tower that converts all radio signals into a single stream, having GPS, mobile, land phone even walkie-talkie merged onto one device.
But what are the implications for the industry from a billing perspective? Will this make customers' bills even more confusing?.
Logan Orviss comments, "Spectrum technologists have long dreamed of the capability to integrate a wide range of radio systems into an affordable and unified platform, but to justify the development costs, how many subscribers who use (and pay for) the complete range of services on offer will be needed? From a billing perspective, the gathering of service usage data from a consolidated 'pipe' may become much simpler, but many complexities will arise in determining the allocation of costs and revenue sharing settlements, given that a wide variety of interconnect partners, access providers and 3rd party content aggregators may be involved".
"If the customer is lucky, he may be offered 'simple billing' by packaged, subscription-based and/or flat rated tarrifs for the majority of services he consumes".
"However, it is unlikely that the availability of a single technology channel will lead towards all customers accessing all of their communications and entertainment services via a single terminal, which means that the complex requirements of offering unified billing across multiple platforms will still remain".
"Ultimately, success will be determined by the combination of business model, pricing, ease of use, brand positioning and the stickiness of the service portfolios offered, not the enabling technology".
Real-time billing - can it exist? In the mobile sector, on-demand content download is at the heart of carrier's APPU growth plans.
Is real-time billing a possibility for operators: How instant can it actually be?.
According to Logan Orviss, "Real time charging is a must (several reasons: fraud prevention, real time services and prepaid, service convergence, conversion of prepaid to post-paid, etc)".
"In reality, however, for most NOs real time billing is still not possible".
"With the integration of platforms (IMS, NGN), there will be an opportunity to have at least a portion of the range of services charged and billed in real time".
"There are several problems to be solved, e.g roaming and CAMEL 3.4 which has not yet been introduced in many countries".
"However, real time service rating is absolutely essential, even where real time billing is undesirable (for 'transparency avoidance' reasons!) or not possible - for example where term or threshold discounts cannot be calculated before the end of the billing cycle".
Ultimately, the determination of 'real time' should be based on what customers (and internal business users such as fraud managers) find acceptable, both for timely service provisioning and for accurate billing fulfillment.
However, the more complex the delivery architectures of the services, and the more 3rd parties involved in the charging and settlement processes, the bigger the minimum duration for 'end-to-end real time' can be.
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