Virtual network operators the next evolution of a competitive telecoms market
A mobile virtual network operator is a company that buys network capacity from a network operator to offer its own branded mobile subscriptions and value-added services, in South Africa Virgin Mobile is an example of an MVNO.
Virtual Network Operators
Richard Hurst, a senior telecoms analyst, says that virtual players are often regarded by incumbent operators as the Trojan Horse of the telecommunications market offering new entrants the opportunity to gain rapid access to markets which may be well established together with the opportunity of owning the customer interface via billing and branding.
“The VNO and MVNO models are also seen as the next evolution of liberalisation by regulators seeking to inject additional competition into markets which may be nearing saturation,” addsHurst.
However, BMI-T believe that there exists a significant opportunity for existing network operators to enter into a win/win situation where operators increase network usage and reduce cost elements such as handset subsidies thus further increasing revenues while engaging in partnerships with the new players expected to emerge in the services layer.
More choice for consumer
“The competitive environment should be positive for the consumer and business markets as operators begin to differentiate themselves on pricing and services implying a greater choice for consumers,” says Hurst.
Growth in lower ARPU customers in future would typically come from new entrants of the branded variety such as Pick N Pay or Kulula.com, whereas existing MVNOs like Virgin Mobile would probably contribute significantly to the middle-market growth, as well as signing up high-end and low-end customers.
The net impact of this scenario is that MVNOs could account for 18% of all mobile cellular revenues by 2011, up from 16.5% in 2006, where revenue is defined as customer billings.
Fixed line VNOs (including present day second tier players namely ISPs/VANS) could achieve a growth in total market share of the fixed line (data and voice) market, from 13.3% in 2006 to 21.5% in 2011. Much of this growth in market share will be due to growth in voice services provided by second-tier players.
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