The benefits of mobile virtual network operator (MVNO) partnerships
In an evolving telecommunication industry, mobile virtual network operators (MVNOs) can offer new services and value to both consumers and existing mobile network operators (MNOs). ITU News spoke with Pascal Prot, CEO and Founder of the Paris-based MVNO, Legos, about the benefits of MVNOs and how they can partner with MNOs. Mr. Prot spoke at ITU’s “Rise of the MVNOs – Leveraging MVNOs in an ‘everything connected’ world” event on 12 September in Durban, South Africa.
What are the benefits of MVNOs increasing connectivity and how will this improve people’s lives?
Telecoms connect individuals and, therefore, enable communities to communicate.
We are slowly leaving an era where the telecom industry was focused on infrastructure deployment in order to cover our biggest community: the world.
While doing so, the market only offered a “one size fits all” portfolio to the end-customers. Now that most of the countries are connected, it is time to match customer-specific demands and to go deeper in the value proposition.
“MVNOs are now best positioned to address some specific communities’ needs and deliver segmented services to niche-market verticals.” – Pascal Prot, CEO, Legos
In the era we are entering, our market will grow by bringing more value to each community, by offering community-based services to each segment.
Examples are already there: Big operators now target large communities like youth or movie-savvy customers (with Netflix included in the bundle), and some operators are specialized in expatriates, cross-border tourism, ethnic segments, business travelers and more.
Why? Because community-based services enhance people’s lives, making individual human beings closer to their relatives, friends and co-workers.
MVNOs were originally invented to extend mobile network operators (MNOs) capacity to sell plain vanilla service.
MVNOs built up-to-date technical infrastructures and, therefore, are more agile. For this reason, MVNOs are now best positioned to address some specific communities’ needs and deliver segmented services to niche market verticals.
To take advantage of this era of community-based services, MNOs need MVNOs to target more communities.
What are the advantages of partnerships between MNOs and MVNOs?
MNOs are focused on technical capacity deployment, customer acquisition and retention.
Thus, MNOs see MVNOs as the right partners to add value to their radio network and coverage, while sharing the risk of a specific business case on a given market opportunity.
By trusting MVNOs to address specific niches, MNOs can enlarge their customer base while remaining focused on their core business.
How has Legos benefited from being a Full MVNO?
Having signed a Full MVNO agreement with an MNO doesn’t bring any benefit to Legos as such. From a regulatory prospective however, being a full MVNO is a tactical choice, enabling us to rent the radio network instead of building it.
Note that Legos is a full telecom operator, which is more critical to our strategy than just being a Full MVNO. We built a core network, a bunch of voice, data, SMS services and a business support system (BSS).
Legos is a fully declared operator in numerous countries, and signs Full, Light and Medium MVNO agreements to serve its operations.
Becoming a Full MVNO enables a first international expansion (with connectivity, roaming and interconnection freedom) but it needs to be reinforced by a specific agreement in each country.
What are the opportunities and obstacles for expanding into emerging markets?
In developing countries, MVNOs, as much as MNOs, foster the rise of new innovative services, shortening the path to development through mobile banking, co-working and self-learning.
This trend is often supported by the national regulatory agencies and, broadly, a free and competitive telecom market can leverage innovation and information.
However, until today, some countries keep protectionist regulations that don’t allow Full MVNOs to grow, or don’t even provide the legal framework to create MVNOs.
What would you like to see out of regulatory environments?
The regulator shouldn’t reduce the technical freedom of full MVNOs and should enable them to deal with their own Home Location Register (HLR) and Home Subscriber Server (HSS), which are databases of subscribers. Besides, the regulatory environment must prevent MNOs from differentiating the treatment of Full MVNO customers compared to their own customers (e.g. by reducing the quality for MVNOs).
“A cross-border regulatory framework would be most-needed in the African and Asian markets.”
Second: equal treatment.
The expansion of innovative telecom services (such as MVNOs) shouldn’t be slowed down. Improved declaration processes (with better tools and a better transparency) has to be a worldwide goal. For instance, enabling English-written declarations and discussions would be a first step.
Third: an African and Asian continental framework.
Similarly to the European and American frameworks, a cross-border regulatory framework would be most-needed in the African and Asian markets.
For the reasons we previously stated, telecom innovation in those countries will need a liberal and reliable framework to thrive.
Views expressed in this article do not necessarily reflect those of ITU.