In January this year, China issued 11 MVNO licences to private companies looking to resell services from China’s three state-owned operators. In March 2014, Virgin Mobile acquired a MVNO licence from Saudi Arabian regulators, and later the same month UK operators BT and EE announced an MVNO agreement.
There has been a significant growth and birth of new MVNOs worldwide, which is expected to present lucrative opportunities for all players involved. The growth in MVNOs has led to a need – as well as potential revenue opportunity – for a tailored solution to manage the process.
Enter stage right, the mobile virtual network enabler (MVNE).
Potential in the market
An MVNE is a service orientated towards MVNOs looking to enter the market quickly. It allows companies, both inside and outside the telecoms space, to launch an MVNO in a streamlined fashion, without a large investment.
Communications service provider Amdocs launched its MVNE solution in 2007 when the company first spotted potential in the MVNO market. “We identified a significant increase in MVNO activity globally, but especially in Europe and the US,” says Kfir Dan-Ari, director of product marketing at the company.
Dan-Ari believes that instead of developing their own home-grown solution, or customising their retail business support system (BSS) to run MVNOs, mobile operators and carriers will reap the most benefit from a dedicated solution.
“[The Amdocs MVNE solution] helps customers to easily expand their business to wholesale by quickly getting MVNOs on board their network, and offers a full end-to-end operation, from customer relationship management (CRM) through to ordering, full rating and billing,” Dan-Ari says.
The benefits are clear but can be narrowed down to three key elements. The first is a reduced cost to market. The MVNE model is opex-based, without the need for high upfront investment costs. This means the MVNO can cut initial costs by operating with a BSS tailored specifically to meet its needs.
The second benefit is speed to market. “Some MVNEs claim they can get an MVNO up and running in four to six weeks,” says Carrie Pawsey, senior analyst of industry, communications and broadband at Ovum. Not only do MVNEs claim to launch the MVNO in a shorter timeframe than a customer would be able to do itself, but Dan-Ari says that the Amdocs MVNE solution also “empowers MVNOs to generate business processes and services on the fly, as well as change existing ones within hours, instead of weeks or months”.
Lastly, MVNEs are said to remove the technical complexity for MVNOs, which is important if the MVNO does not have any previous telecoms experience. This factor seems to have struck a chord with Spanish operator Telefónica Global Solutions (TGS), which launched its own MVNE solution earlier this year.
An operator’s approach
TGS’s MVNE has been created with those outside of the telecoms world in mind. The service is designed to act as a centralised and managed solution within the TGS wholesale portfolio, allowing a quick launch with no need to develop costly systems.
“This means that the customer can focus on their main business and leave the technical aspect in expert hands,” the company claims.
TGS’s interest in MVNEs is rare for a carrier. Traditionally, MVNE players have been platform providers specialising in billing and CRM systems, through one of two business models.
“The first is partnering with an MNO as an exclusive deal, providing the technical implementation expertise but not being involved in the wholesale airtime part of the deal, so there is the three-way relationship between the MNO, the MVNO and the MVNE,” Pawsey explains. “Or some have chosen to be MVNAs (mobile virtual network aggregators) whereby the MVNA has purchased the airtime, run the MVNO platform at an arm’s length from the MNO and therefore the MNO and the MVNO have had no direct relationship.”
TGS’s MVNE move could see other mobile operators follow suit, particularly given the industry thirst to combat declining margins with new revenue streams.
“This has resulted in some operators creating their own in-house MVNE solution to host MVNOs, usually through the acquisition of an MVNE, or by partnering with various technology vendors to create an end-to-end MVNE solution,” Pawsey says. “This is different to the original MVNE business model where the MVNE was the ‘middle man’ between the MNO and the MVNO; here, the MNO retains control of the MVNO and also generates revenues through the enablement services, not just providing connectivity.”
On the technology side, MVNE services have traditionally been reserved for Tier-2 and 3 vendors, as well as smaller solution providers. Major Chinese vendor ZTE, however, has also moved into the market, launching ZSmart – a cloud-based MVNE platform designed to host MVNOs in Europe – in May 2013.
Like Amdocs’ solution, ZTE’s service offers quick service roll-out, fast time-to-market and low upfront costs, enabling MVNOs to innovate in a secure environment.
“We have seen unexplored business opportunities for telecoms operators to target niche markets through deep segmentation, and we believe our ZSmart MVNE solution is well-positioned to meet these demands and allow MVNOs to capitalise on value-added services within their networks,” says Ivan Cairo, business development director at ZTE.
There are, however, several other approaches to the MVNE model. CSG International’s billing system is an example. Although not an MVNE solution per se, CSG offers billing systems and managed services that enable MVNOs to operate.
“What we’re finding in many situations is as well as the MVNE allowing MVNOs to use their network, MVNEs can use our software to provide the back office and billing software solutions that the MVNO needs as well,” says James Kirby, executive director of managed services at CSG International.
Kirby explains that CSG’s solution is well suited to the MVNE environment, as it provides a turnkey solution for operators. “An operator can use our software on-premise, via the cloud or as a managed service where we can manage the MVNO on behalf of the MVNE,” Kirby says. “So if the MVNOs have any problems with billing or associated CSG solutions, they contact us, rather than contacting the MVNE itself.”
CSG claims to support operators and their MVNO activities across the globe. It is through these relationships, says Kirby, that he has noticed a lot of developments in the space.
“We are seeing a lot of innovation worldwide and it is accelerating as data and high-speed internet over mobile is becoming more widespread,” he says.
Asian acceleration
So with Spain’s TGS, Missouri-based Amdocs and CSG in Colorado making strides in the MVNE spaces in Europe and the US, where next for the MVNE boom?
“I think to a certain degree Europe and North America are reaching saturation point in terms of MVNO activity,” Kirby says. “Asia is definitely a more up-and-coming market.”
Pawsey agrees, adding that any “markets that are opening up to wholesale offer the greatest potential for both new entrant MVNOs and MVNEs looking to service them”.
“That would include Latin America and parts of Asia, particularly China,” she says.
Lansdowne Consulting also expects market liberalisation in Latin America in 2014-2015, largely driven by Brazil and Mexico.
“Unlike the MVNO growth in Europe during the last decade, growth in the first phase will not be driven exclusively by so-called ‘low-cost’ providers,” the report forecasts. “Value propositions based on ethnic groups, immigrant populations and high value-added applications will contribute to more sustainable growth then even Europe has shown.”
Dan-Ari says that “frozen” MVNO markets in South American could soon open up: “When it comes to frozen MVNO South American markets, we believe that changes in regulations would soon push forward heavily-regulated countries such as Chile, Colombia and Brazil into more MVNO activity within the next few years,” he says.
Africa could also become an important MVNO market. Earlier this year, CSG signed an agreement with MTN South Africa and Kirby believes that the African market is becoming more established in terms of its MVNO activity.
“Asia is definitely becoming more prevalent and I think Africa will go that way as well,” Kirby says. “In the African market we’re seeing MVNOs starting to gain traction.”
MVNE solutions are evidently having a global effect and Pawsey concludes: “We certainly see MVNE solutions as a revenue stream for operators.”
