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ITS 15th Biennial Conference, Berlin. MOBILE VIRTUAL NETWORK OPERATORS: CASE FINLAND Annukka Kiiski Helsinki University of Technology [email protected] 6.9.2004. Outline. MVNO definition Regulation MVNO business strategy scenarios Case study: Finnish market overview

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Presentation Transcript
outline
Outline
  • MVNO definition
  • Regulation
  • MVNO business strategy scenarios
  • Case study: Finnish market
    • overview
    • effect of the deregulation
    • MVNO strategies
  • Conclusions
mvno definition
MVNO definition
  • provides mobile voice and data services without owning the spectrum license
    • network capacity is gained through commercial, bilateral agreements
  • delivers its own SIM cards
  • takes care of
    • branding of the services
    • marketing of the services
    • billing of the services
    • customer care
  • can be divided into subcategories (light – true) based on
    • network components owned by MVNO (a technology-based definition)
    • services provided by MVNO itself (a service-based definition)
regulation
Regulation
  • Communication directives issued by EU have enabled the business opportunity for MVNOs
    • main focus is to obligate network operators to lease out network capacity at a fair price
  • Regulatory acts
    • mobile number portability
    • regulation of interconnection, call termination and call origination fees
  • Not all EU members have incorporated the European Union Directives into national law
mvno business strategy scenarios 1
MVNO business strategy scenarios (1)
  • low price
  • narrow focus
  • service differentiation
  • service reselling
  • international clustering
    • defined by analyzing the business environment, MVNO’s strategic position on the market and its internal resources
case study finnish market
Case study: Finnish market
  • Advanced and exciting mobile market, because
    • the first GSM call was made in Finland
    • until the year 2000 Finland had the highest mobile subscription in the world
    • competition has long roots because of the numerous local telephone operators
    • a large number of diverse MVNOs
  • Despite that, Finland has fallen behind in international rankings and mobile data usage during the last two years
finnish market overview
Finnish market: overview
  • 3 GSM licenses, market shares
    • TeliaSonera 49%
    • Elisa Mobile 28%
    • dna (Finnet Group) 15%
    • MVNOs and MSOs 8%
  • EU regulation has been incorporated in the Finnish law
    • TeliaSonera the only SMP in call origination market
    • all incumbents SMPs in call termination market
    • mobile number portability 7/2003
  • Market is really active
effect of the deregulation on the finnish market
Effect of the deregulation on the Finnish market
  • incumbents have had to lower their prices and subsidize subscriptions with free air time and goods
  • decrease in the GSM call prices 6,9% during 2003
  • churn roughly doubled after the MNP and invasion of MVNOs, resulting 23% yearly churn
  • usage of new data services hasn’t increased as expected
  • subscriptions with ’one rate for all calls’ have become popular
finnish mvno strategies 2
Finnish MVNO strategies (2)
  • Applying the strategy scenario model to the Finnish market shows that Finnish MVNOs are deploying multiple strategies (instead of just one)
  • Only one of the MVNOs (Saunalahti) is making profitable business
  • Only one of the MVNOs (MTV3) is using service innovation to attract new customers
conclusions
Conclusions
  • The defined model is applicable
    • it helps to explain the strategic options MVNOs have
  • Regulatory encouragement for creating a MVNO opportunity is likely to increase competition and to lower tariff levels
  • The service innovation in Finland did not increase despite the increased competition
  • For MNOs, MVNO is an opportunity in addition to a regulatory imperative
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