FEATURE: Wireless VoIP: Convergence and the Power of the MVNO

Wireless VoIP: Convergence and the Power of the MVNO
BridgePort Networks' Sanjay Jhawar examines how the MVNO model could be used by pure-play VoIP service providers, ISPs, and other firms looking to add wireless to their mix of service offerings.

Everyone knows that Mobile Virtual Network Operators (MVNOs) are a hot topic in the wireless industry. But the real question remains: Is being a reseller a solid position building a long-term business?

MVNOs already control much of their operations. A key component driving infrastructure strategy for MVNOs is the need to control data, billing, and customer interactions. An example is Virgin Mobile, an MVNO that controls the entire customer face. Virgin runs its own customer database, billing system and customer care relationships. It also manages its own relationships with handset manufacturers and retailers.

However, the ultimate level of customer ownership is gained by direct call control of the customer's phone number, or identity. This would provide the capability to bridge to VoIP services in broadband and WiFi home and enterprise environments offering a stickier single number service with cost and coverage benefits. To get access to that number, one has to carefully consider the equipment and software used by the MVNO. Those MVNOs who can link to the core network of the mobile operator which supplies their service, and specifically to the HLR (Home Location Register) and MSC (Mobile Switching Center), will be able to most strongly differentiate their service in a convergence world. Technology exists today allowing the MVNO to access that number and bring VoIP economics to the MVNO service, saving as much as 75 percent in wholesale costs on the 25 percent to 45 percent of calls made or received in broadband environments. The key is bypassing the legacy PSTN in the connection from VoIP to mobile network.

Using this model, even an ISP (Internet Service Provider) can become an MVNO and offer wireless services based on its existing strong brand, and can cross sell to existing customers now buying Internet access, or VoIP services. They could then even pair up with a handset maker to offer branded phones.

The Power of Bundling

The VoIP MVNO solution would allow a VoIP provider to add wireless services by peering with a wireless carrier to use its network. Since VoIP providers have created their business based on low-cost, feature-rich telephony -- and because VoIP providers compete in a highly competitive market that is now being flooded with new entrants -- they need to be able to quickly create new services and increase revenues. By allowing their subscribers to roam from the primary VoIP network onto an MVNO-type wireless network, they can grow the subscriber base by offering bundled services to gain a higher share of the subscribers' telecom spending.

Potential single-number subscriber scenarios the VoIP provider could offer:

A Roam-to-Mobile Option: Consumers could roam their home or home office VoIP phone number to the wide area cellular network, automatically delivering calls on their PC at their desk and on a regular cell phone at other times, using "presence" technology. This is ideal for someone who prefers to pick up calls on a VoIP connection when at home or their cellphone outside.

Roam-to-Work SME (IP Centrex integration): Small/midsized enterprise subscribers could roam their office number into the mobile environment using a dual mode SIP/WiFi/cell phone which seamlessly moves the call to the cellular network, bypassing the PSTN. All the fixed and mobile infrastructure is hosted by a service provider for a fully managed solution.

Roam-to-Work Enterprise (IP PBX integration): Large enterprise subscribers could roam their IP PBX number into the mobile environment, delivering calls on dual mode SIP/WiFi/cell phones. This form of telephony works with an enterprise's own telecom infrastructure.

An MVNO strategy provides the opportunity to bundle mobile and broadband services or to bundle broadband services with mobile services. In both cases, subscribers would use a combination of devices, a mobile phone with a SIP device or a dual-mode device (a handset that can access both cellular and WiFi networks).

What's In It for the Wireless Carrier?

MVNOs make lots of sense for wireless carriers. They provide an opportunity to attract wholesale customers through complementary channels offered by non-mobile companies. The companies will bring with them brand loyalty, new usage models, low cost of subscriber acquisition adding up to profitable new revenue. New cash flow can then be invested in future mobile network build-outs. Not a bad deal for a carrier that needs to build the customer base, while maintaining current networks and building out 3G networks.

Partnering with just the right MVNO could be a way to shore up future business. In particular, non-traditional "wireline number prime MVNOs" offer an accelerated form of fixed-mobile substitution that can be an attractive way for mobile operators to grow in a saturated market.

The MVNO market is not for the meek. In Denmark there has been consolidation in a small market where more than 20 MVNOs have arisen.  But as an example of the potential here in the US, Ovum reports that the prepaid market accounts for only 10 percent of the subscribers and shows that US growth for brands that cater to youth via prepaid services could be high. These are pay-as-you-go services that fit a young person's budget and make parents more comfortable. Several MVNOs have focused on this market segment and have brought their wireless carrier partners a fair share of revenue serving an earlier unforeseen need. By combining a popular desktop IM and VoIP client with mobile phones, an MVNO could leverage this market to generate more revenue.

Many wireless carriers are looking at this argument and they do not see a reason why would offer this kind of MVNO. But as convergence blurs the lines between wireless and wireline, both big brands and savvy upstarts will leverage this new technology to extend services across as many platforms as possible. It is the VoIP service provider, wireless carrier, ISP, or cable operator who does not see the threat of this technology and the opportunity of peering and partnerships who is in the biggest danger of losing business.

Sanjay Jhawar is Senior Vice President of Marketing and Business Development for BridgePort Networks. He is one of many speakers at wVoIP 2005, an exclusive executive summit dedicated to the convergence of wireless and VoIP. To learn more about wVoIP 2005 visit: www.wvoip.com.