5/27/2010 2:45:00 PM
MVNAs: The evolution of a new model
The emergence of MVNAs – or ‘aggregators’ – has seen the MVNO landscape change beyond recognition over the last year.
Pioneered by 3’s X-Mobility, all the operators bar O2 have launched their own MVNA platform, effectively allowing them to launch smaller MVNOs with little cost.
The move, already seen in ‘mature’ markets such as the Netherlands, has been compared with the UK distribution model, as it adds another layer between the operator and the end product.
The model is in its early stages, but operators are already going full pelt, with Orange saying it will launch 20 MVNOs on its Transatel platform by the end of this year.
Strategy Analytics analyst Phil Kendall says: ‘This [MVNAs] is a good idea. Revenue comes from the scale. I think it’s becoming increasingly hard to find the brand that will give you a million connections. If you want to scale as a wholesale player, it’s better to get lots of brands to get 30,000 connections on the MVNA than one million on one.’
Vodafone is the latest operator to launch an MVNA this month, with its Teleena offering. ‘We have a strong strategy in the wholesale marketplace,’ says Vodafone head of wholesale Tim Stone. ‘We want to be the partner of choice. I believe the proof of that is in the partnership you create – we choose the right partners and we make them very successful.’
Stone says he believes that the wholesale marketplace needs to be attacked in ‘a number of directions’.
‘Direct needs to be bespoke, with larger partners,’ he says. ‘Then we need to create the opportunity for those niche markets. What the aggregator brings is lower cost entry and a faster speed to market. We will continue with a multi-level strategy.’
Stone says that the MVNA market ‘tends to be more niche’.
He points out that ‘if you look at the Netherlands, they’ve been using aggregators for some time’.
Stone compares MVNAs to ‘the distributor side of MVNOs’. He says: ‘If you look at other parts of the world, wholesale comes in at the maturity of a marketplace. In the UK, we have reached that level of maturity – it’s a freer marketplace and the market becomes more competitive.’
And operators are beefing up their wholesale strategies, says Kendall. ‘It’s a network evolution to the industry. The ability of an operator brand to reach across the market is challenging. There is a natural dynamic. It’s about operators getting people they can’t connect.’
Everything Everywhere wholesale VP Marc Overton is ramping up the newly merged operator’s wholesale strategy. Orange’s MVNA, Transatel, works with Orange’s parent group, so it had a standing start in the area. Orange is also in the process of merging with T-Mobile, which could see its MVNA merge with T-Mobile’s offering.
Transatel has ‘significant capabilities’, says Overton, such as pay-as-you-go, contract and m2m. ‘In Europe we are seeing a lot of m2m,’ he adds. ‘There are a lot of different opportunities – there is Sim-based PAYG, data and contract.’
The operators’ MVNAs are based on similar models, with most transferring those with 30,000 connections or less to their MVNAs. While the MVNA puts the MVNO to market, it pays the operator for traffic on its network.
Vodafone has ‘an open relationship’ with its MVNA Teleena, says Stone. ‘When someone approaches us and it would be a more appropriate to go through Teleena, we just pass them on.’
Meanwhile, 3 MVNO account manager Darren King says 3 is able to attract MVNOs that it wouldn’t approach directly, because they are either ‘small or have a more simplistic MVNO model’.
3 was the first to launch its X-Mobility MVNA last June. It also has a relationship with Aql on the fixed line, convergence side.
King adds: ‘If we get a player approach us who is more suitable for X-Mobility, or they want an immediate launch, we will pass those onto X-Mobility.
‘Our approach to partnerships is, we will work collaboratively with X-Mobility,’ says King, but X-Mobility owns the relationship. He says: ‘We only work with X-Mobility as an aggregator. It is free to establish how it does its revenue models and we charge a cost. It’s not a fixed cost, it’s traffic per unit.’
Overton reports a similar partnership. He says: ‘We have a wholesale deal with Transatel but we have a partnership. They pay for traffic, but we put traffic back to Transatel and they put stuff to us.’
King says: ‘I think Orange and us have a similar model – being highly targeted and segmented. It means that sales are based on relationships.’
Overton agrees that ‘3 and us have a similar sort of engagement model’, but he adds: ‘Except theirs is only 3G so doesn’t have our 2G network.’
But with so many MVNOs, is the MVNA market likely to become saturated? Stone says no. ‘If we look at the Dutch market there are lots of small MVNOs. There will be successes and failures – as you get with a distributor in the market.’
‘If you’ve got a good idea, costs are low. Going forwards it’s all going to be more mainstream,’ says Overton.
He adds: ‘It’s a numbers game. There are lots of small MVNOs and you’ll see more and more.’
The idea fits in well with Vodafone’s MVNO strategy – segment by segment, Stone says. ‘SME resellers work on smaller markets. If you
are in that space you offer a mobile offering under your brand. Ethnic segments are also powerful.’
But Kendall says it is debatable how much volume MVNAs can bring.’ It’s still relatively small volume. In the Dutch market, MVNO is dominated by brands that have relationships with operators.’
He adds that signing up 10 to 20 brands over a two to three year timescale would be considered successful. ‘It’s a slow process but [Orange’s MVNA] Transatel is active in other countries so they can bring brands online that can go to the UK.’
Surprisingly, O2 has not yet launched an MVNA – but it is likely to, according to observers.
Kendall says O2 being late to market is not a massive issue. ‘In a mature market, the MVNA model is the way it goes – whether it’s the end part or part of a cycle.’
The landscape is changing but it is only in its initial stages. Thanks to MVNA models, the next two years could see hundreds of targeted MVNOs add revenue to the networks with the ‘aggregators’ footing the bill.