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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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ITS 15th Biennial Conference, Berlin

MOBILE VIRTUAL NETWORK OPERATORS: CASE FINLANDAnnukka KiiskiHelsinki University of [email protected]


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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