Europe's MVNOs fight back

In the past, mobile virtual network operators (MVNOs) were generally regarded as the poor relation in any partnership between a wholesale provider and a brand that wished to start providing mobile services, and with good reason to be fair.

Certainly, in the easyMobile era circa 2006, Europe's mobile market started to look a bit cluttered with the corpses of MVNOs that had tried and failed to launch a service with cheap prices as their sole USP. Surviving on the tiny margins that exist between the fees charged by wholesale network operators for voice and data and the low tariffs designed by MVNOs to attract subscribers was a fragile business model that could be destroyed all too easily.

In recent years there has been a much greater focus by MVNOs on niche marketing and segmentation, while others such as Tesco Mobile and Virgin Mobile have enjoyed the backing of a strong parent company. Recent launches such as iD from Carphone Warehouse are increasingly taking on the bigger players with innovative offerings such as inclusive roaming, while fixed operators including Liberty Global use the MVNO model as an efficient way to add mobile to their service mix.

MVNOs are also waking up to the fact that changes in Europe's telecoms landscape presents them with both challenges and opportunities. They are anxious to ensure that their access rights are not affected by the arrival of cross-border services and the abolition of data roaming charges, for example. On the other hand, they appear to regard consolidation as a good thing. Indeed, the requirement to provide network access to virtual players has been used by the European Commission as a competitive remedy in markets where consolidation has already been approved--including in Austria, Germany and Ireland.

MVNOs also believe that the reduction in supply will benefit them because constraints would then be imposed to ensure competition remains in place. That certainly appears to be the belief of leading MVNOs in France, which recently pleaded for a return to a market with only three mobile operators. Indeed, French MVNOs have been complaining for years about the treatment they have received from Orange, SFR, Bouygues Telecom and Free, and have called for stricter price regulation of the wholesale market.

Just a week after France's alternative players issued their plea, MVNOs from across Europe came together to form MVNO Europe. The association has evolved from the former EAFM (European Association of Full-MVNOs), and plans to tackle the impact that regulatory change will have on the businesses of MVNOs of all shapes and sizes.

Certainly, MVNOs are an important strategic focus for network operators themselves as they seek to establish and grow their wholesale businesses. In future, perhaps there will an even greater rapport between the two sides.--Anne