Tier 1 Operators - MVNO Market Development Strategies
2005.12.13   |   15 pages   |   MVNOs & Distribution Strategies


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Tier 1 mobile network operators ("Tier 1s") refer broadly to the early entrants in a mobile market who have built significant market share and brand recognition. This report introduces MVNOs from the perspective of a Tier 1 operator. We summarise the factors influencing the market, the various types of MVNOs, the reasons for partnering with them and a summary of the risks that MVNOs may pose.

Tier 1s may choose MVNO partners that already operate successfully in well-defined market segments. This report highlights the need for Tier 1s to identify the criteria they require to assess each potential partner in their market. The benefits for Tier 1s of hosting MVNOs are often unclear, and they may conclude that there is no strategic advantage. This report highlights examples where MVNOs have created value for Tier 1s with their business models, and where Tier 1s have missed opportunities with innovative partners.

Keywords: base, entrant, threat, early, partnerships, assess, fin, enable, pose, saunalahti, incumbent, teliasonera, 1 mvno, leading, opportunity, partners, criteria, elisa, virtual, business, mvne, tier, belgium, advantage, influence, case, commitment, brand,

1 Overview 1
2 Why should Tier 1s care about MVNOs? 2
2.1 Maturing markets 2
2.2 Consumers driven primarily by handsets and by basic service price 2
2.3 Subscriber acquisition costs 3
2.4 Allow others to address specific segments...and let them shoulder the risk 3
3 Strategies for Tier 1s to accommodate MVNOs 4
3.1 Decide the policy for partnerships with MVNOs 4
3.1.1 CBB & Telmore in Denmark 5
3.2 Determine the potential partners and the types of possible competitors 6
3.2.1 Price/Value 6
3.2.2 Affinity players 7
3.2.3 Community segmented 7
3.2.4 Lifestyle & technology players 8
3.3 Be selective: choose the right MVNO partners 9
3.3.1 A strong brand allied with a smart marketing plan 10
3.3.2 Ambitious growth plans, and realistic growth potential 10
3.3.3 Distribution network and customer touchpoints 11
3.3.4 Strategic benefit 11
3.4 Partner with MVNEs? 11
3.5 Negotiate the right wholesale agreements 11
3.6 Look to create value for shareholders 12
4 Risks 12
4.1 Cannibalisation, or a reduction in the value of the market? 12
4.2 No sure-fire certainties 13
4.3 Customer ownership and development 13
4.3.1 Saunalahti, TeliaSonera and Elisa in Finland 13
4.3.2 Customer development 14
4.4 Rivals aggressively signing new MVNOs 14
4.5 Is it necessary to partner with MVNOs? 14
5 Conclusion 15

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