A Brief Comment On MVNOs

by Carlo Longino on 18. Jan, 2006 in Advice to Operators

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I saw a story just now saying there are rumors T-Mobile is interested in buying Virgin Mobile UK, and that it’s planning a bid to counter existing bids from cable operator NTL.

The specifics of the situation aren’t really what I’m interested in here, but some general thinking about incumbent operators and virtual ones. Many MVNOs pitch themselves to the public as the anti-operator, offering low costs, simple tariffs, good service and so on — all the things people typically complain about from their operator. There have been several instances of successful MVNOs selling out to incumbent operators. Instead of spending all that money to buy the virtual operators, why don’t the physical operators just act more like them to begin with?

Feel free to explain what I’m not getting in the comments. That’s fun for all of us.

—–>Follow us on Twitter too: @russellbuckley and @caaarlo

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  • Sarah
    I agree with Carlo's last paragraph. MVNOs are extremely low cost operations. They simply don't have the operating overheads (inc bureaucracy) that MNOs do. This is the attraction for MNOs hosting these 'upstarts'.

    MVNOs also work thanks to the internal culture of the 'little battler'. I would suggest that when they are bought out by MNOs, they will lose this cultural edge and the customer will see this. It will impact their ability to prove that they are truly the customer advocate.

    Of course, buying an MVNO also means the MNO can boast a larger customer base to the market. So it really is all about the numbers in the end.
  • Carlo Longino
    I'm not sure I buy into all the niche and segmentation stuff, and least not from the MNO side. Often you hear MVNOs say that carriers like to work with them because they can reach market segments the mobile operators haven't been able to address -- I think that's total bunk. MNOs do anything for one reason: financial benefit. And in the mature markets where many of these MVNOs are launching, penetration stats would indicate that MNOs haven't had trouble attracting subscribers across demographics.

    But, having said that, it's probably more financially lucrative for them to simply wholesale the airtime to MVNOs and forgo the costs of actually serving those pesky customers than to try to tailor their content to meet the interests of different groups.
  • The huge telcos see MVNOs more as a way of doing market segmentation than anything else. It's a way for them to offer a cheaper, low-end service without canibalising their lucrative business market.
  • I agree with Jon except for one thing. They don't move like a sloth on diazepam, I think the sloth is actually dead and only appears to be moving because we're on Diazepam.

    Actually, I think focus has a lot to do with it as well. There is so much for a MNO to focus on that sometimes it's hard to get down to the business of business. MVNO's have the luxury of being laser focused on a few key things that really mean something to the niche that they may be targeting.

    Or not. I just like posting stuff on Mobhappy because it's my favorite blog. I LOVE YOU CARLO! I'm your biggest fan! YEAH!!!

    LOL
  • Jon Beverley
    Carlo,
    Easily answered: because they can't. MVNOs tend to be marketing-led upstarts with a relatively small infrastructural overhead. MNOs are monolithic matrix-managed behemoths that move like a three-toed sloth on Diazepam.
    Jon
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