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MVNOs and their Extinction!


As of 2008, MVNO subscribers account for at least 3% of the world’s mobile subscriber base. They have only been reasonably successful in a few countries around the world, gaining between 8-10% market shares in those markets. And things start to go south from there for MVNOs!

These are not very encouraging numbers to justify any bright future for this breed of operators. Early 2000, all MVNOs were under impression that “content is King”; so we (ESPN, Disney, etc) can rule and legacy mobile operators are just “dumb pipe” providers which are going to extinct without our help. Every time they were questioned about their business plan viability, MVNOs were throwing Virgin Mobile’s name as a success story in UK.

Well, let me tell you a story. Once upon a time (around 1995) UK government released spectrum for two new mobile operators in 1800 MHz band. One of the new operators was a company from Hong Kong called Hutchison Whampoa with tons of money. They created a flashy brand called Orange, spent tons of money to promote it and rest is history. The other operator was a company called Mercury Communications (who?!). They tried to be creative and crate a brand name called Mercury one-to-one, with a boring logo and advertisement. Our poor one-to-one were not going anywhere until a charming prince showed up and said let me help you with my brand name. His name was Richard Branson and his company was Virgin! Virgin was a household name and helped one-to-one to utilize its network by using its massive marketing machine and its brand name power. It was nothing to do with content! It was all about brand recognition. These days mobile operators are in a better position than lots of conetnet guys in terms of brand name!!! I guess people did not really analyze this unique partnership and tried to build a new business out of that. Lets read some history next time before defining a new business!

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  1. September 13, 2009 at 2:36 am

    Hi,
    realy true and funny history.
    anyway, how coul you see blackberry and iphone in mvno arena?
    in my idea they are realy global MVNO, in the term of helping mno to sell more sim, but offering a very and true content.
    okok, they are niche (bb??) not massmarket, but some issue mvno dont understand globa is NICHE.
    they try to mirror mno market and in that case they fail.
    take a look at ethnic (niche market) and you see success.
    Alex

  2. babakjaf
    September 13, 2009 at 8:30 am

    Alex,
    Thanks for your comment! You are absolutely right, a niche and “vertical market” is the solution. But as I mentioned in my previous post, it should be around some sort of application rather than pure content. Whatever you like to call it iPhone and Blackberry are two success story because they have created their vertical market.

    Babak

  3. Paul Wade
    September 13, 2009 at 10:22 am

    Interesting comment, except for a couple of minor facts , 1 2 1 was sold to T-mobile not Virgin, Virgin came along later and negotiated an MVNO agreement with T-Mobile…also Branson was not involved much, the MVNO was started by some industry professionals who “rented” the brand from Branson…classic MVNO brand approach… but hey, never let the facts get in the way of a good story….

  4. babakjaf
    September 13, 2009 at 10:37 am

    Thanks Paul for comment. I didn’t mentioned Virgin bought 1 2 1! Virgin as MVNO was using 1 2 1 network (same as Virgin was using Sprint in US and …). Later on when 1 2 1 acquired by T-Mobile (and still) Virgin is using that network.

    Thanks for your interest anyway and keep on.

    Babak

  5. Sumathi Gopal
    September 14, 2009 at 9:12 am

    Thanks for the story Babak. It only proves the need for MVNOs (CricKet too?).. may not be the antidote for content providers, but seems the much needed partnership for service providers. MNOs can focus on infrastructure quality and reliability, while MVNOs deal with marketting and sales to end consumers ….
    similar to automakers and car dealers?

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