The Future of MVNOs in the 3G era

Table of Contents

0 Summary: 3G will fuel the growth and diversity of MVNOs, and will require revised strategies

1 MVNO strategies must be evaluated again in the context of 3G

• 1.1 Definitions of MVNOs vary, but we define them in a broad, functional sense
• 1.2 The broadening range of MVNOs demands attention from the telecoms industry

2 MVNOs are growing in number, importance and diversity

• 2.1 MVNO activity varies significantly between countries, in terms of the number of MVNOs and their market focus
• 2.2 Denmarks discount service providers and MVNOs have acquired nearly a quarter of all mobile users
• 2.3 MVNOs have been a feature of the UK market since 1999, with most focusing on discount services
• 2.4 France has experienced a recent surge in MVNO activity, as several media companies become MVNOs 2.5 MVNOs in the USA are addressing a broad range of opportunities, assisted by Sprint as a willing host

3 Current MVNO implementations have limitations and risks

• 3.1 An overabundance of discount MVNOs could harm future service evolution
• 3.2 Some MVNOs are looking to drive greater value, within the constraints of their host network technology
• 3.3 Strong MVNOs can help mobile operators to grow market share, but their hosts must manage the consequences
• 3.4 Regulators must think carefully before enforcing access for MVNOs

4 3G will fuel the number and diversity of MVNOs

• 4.1 3G service capabilities, capacity and costs will encourage the market entry of new types of MVNO
• 4.2 Discount MVNOs could benefit from the cost improvements of 3G, although they must be aware of potential drawbacks
• 4.3 3G opportunities and threats may require existing MVNOs to adapt their strategies and possibly to switch host operators
• 4.4 To benefit from 3G MVNOs, mobile operators must choose the right portfolio and partners
• 4.5 Hosting MVNOs could be a necessary strategy for 3G new entrants to achieve profitability more quickly
• 4.6 Regulators need to create an environment that fosters a rich diversity of MVNOs to use 3G

5 All mobile operators can potentially gain from MVNOs

• 5.1 MVNO arrangements can benefit a range of organisations, as well as mobile operators and end users
• 5.2 Mobile operators MVNO strategies will depend on their competitive position and market characteristics

Actions

MVNO strategies of the following organisations are discussed in detail within the report:

• Boost Mobile
• BT
• easyMobile
• ESPN
• NRJ
• Sprint
• Sonofon
• TDC Mobil T-Mobile
• Virgin Mobile.

MVNO operations of the following organisations are also profiled in the report:

• 7-Eleven Speak Out
• 9278 Mobile
• Airdesk
• AT&T
• Breizh Mobile
• Cegetel
• Dangaard Telecom
• debitel
• EarthLink
• ESPN
• Fresh Mobile
• Futur Telecom
• JusTalk
• KORE Wireless
• LeFrenchMobile
• Liberty Wireless
• Locus Mobile
• M6
• MovidaCommunications
• Neuf Telecom
• NormAction
• NRJ
• Omni Prepaid
• Page Plus
• Qwest Wireless
• Ryanair
• Sainsburys One
• Skypath Networks
• STI Mobile
• TDC Mobil
• TDC Song
• Tele2 Mobil
• TelePlus
• Tesco Mobile
• Time Warner
• Toucan Mobile
• Tracfone Wireless
• U Mobile
• Universal Mobile
• Uphonia
• VivaLiberty
• ZUMA Prepaid Wireless

List of Figures and Tables

• Figure 1.1 Entities considered as MVNOs within the scope of this report
• Figure 3.1 Mobile customers in Denmark by retail provider, December 1999-December 2004
• Figure 3.2 Comparison of TDC, Sonofon and MVNO customer bases in Denmark, December 1999-December 2004
• Figure 3.3 Prepaid and postpaid ARPU for TDC Mobil in Denmark, 2000-2004
• Figure 3.4 Growth in Virgin Mobile and T-Mobile retail customers in the UK, December 2000-December 2004
• Figure 3.5 Evolution of T-Mobile and Virgin UK customer numbers, 2004-2010, stronger T-Mobile growth scenario
• Figure 3.6 Evolution of T-Mobile and Virgin UK customer numbers, 2004-2010, weaker T-Mobile growth scenario
• Figure 3.7 Combined market shares of the first and second mobile operators within Western European markets, 2004
• Figure 4.1 UK market share (by customer numbers) growth scenario for 3 UK, assuming no MVNO partners
• Figure 4.2 UK market share (by customer numbers) growth scenario for 3 UK, assuming three major MVNO partners
• Table 2.1 MVNO characteristics in North America and Western Europe by country
• Table 2.2 MVNOs in Denmark by launch date
• Table 2.3 MVNOs in the UK by launch date
• Table 2.4 MVNOs in France by launch date
• Table 2.5 MVNOs in USA by launch date
• Table 2.6
• Table 3.1 Comparison of the cost of Boost Mobile with other prepaid mobile services in the USA
• Table 3.2 Growth in Virgins share of T-Mobiles annual net customer connections, 2001-2004
• Table 4.1 Examples of MVNOs attracted by mobile operators in the USA
• Table 5.1 Potential benefits of different types of MVNOs to host operators, MVNOs and potential users
• Table 5.2 Strategic options for different types of mobile network operators to benefit from MVNOs