What is a Mobile Virtual Network Operator (MVNO) ?
An MVNO is a business model that emerges when the traditional mobile value chain is ruptured. Therefore, new players can participate in the
mobile value chain and extract value leveraging their valuable assets. The traditional mobile value chain can be separated into two main areas: 1.-
Radio access network that is exclusively exploited by mobile network operators, moreover it requires a license granted by the regulatory
authority to use the spectrum, and 2.- the rest of the elements required to deliver the service to the customers. As it is shown in the exhibit 1, this
second area of the value chain includes: the operation of the core network (e.g. switching, backbone, transportation, etc.), the operation of the value added services (e.g. SMS, voicemail, etc.), the operation of the back office process to support business process (e.g. subscriber registration, handset and SIM logistic, billing, balance check, top-up network, customer care, etc.), the definition of a mobile value offer and the final delivery of the products and services to the client through the distribution channel. It is in this second area of the value chain where other parties can participate by innovating, operating or selling mobile services.
MVNO business models
The different business models in the MVNO market are based on how the value chain is restructured. Therefore, four main business models that
emerge are: Branded Reseller, Light-MVNO, Full-MVNO and Network enablers (Exhibit 2).
Branded reseller is the lightest MVNO business model, where the venture just provides its brand and, sometime, its distribution channels. While the mobile network operator (MNO) provides the rest of the business, from access network to the definition of the mobile service offer. This is the model that requires the lowest investment for a new venture, therefore the fastest to implement. However, most of the business levers remain with the network provider (MNO or MVNE). Therefore, the new venture has a very limited control of the business levers and value proposition of the service.
Full-MVNO is the most complete model for a new venture, where the mobile network operator just provides the access network infrastructure and, sometimes, part of the core network, while the new venture provides the rest of the elements of the value chain. This MVNO business model is
typically adopted by telecom players that could gain synergies from their current business operation.
Light-MVNO is an intermediate model between a branded reseller and a full-MVNO. This model allows new ventures to take control of the marketing and sales areas and, in some cases, increase the level of control over the back-office processes and valued-added services definition and operations.
Network enablers, typically known as Mobile Virtual Network Enablers (MVNE), this is a third party provider focused on the provision of infrastructure that facilitate the launch of MVNO operations. An MVNE can be positioned between a host MNO and an MVNO venture to provide services ranging from value added services and back office processes to offer definition. MVNEs reduce the entry barriers of MVNO ventures, given that an MVNE aggregates the demand of small players to negotiate better terms and conditions with host MNO. They pass on some of these benefits to their MVNO partners. Moreover, the all-in-a-box approach to launch an MVNO through a MVNE has accelerated, even more, the explosion of the MVNO market. Some MVNE models are also called Mobile Virtual Network Aggregator (MVNA), depending on the range of services offered or whether they aggregate different host MNOs. MVNE models range from telco-in-a-box offering, where the MVNE just offers core network, value added services and back office services, to full MVNE as shown in the exhibit 2.