Telcos are much more willing to wholesale mobile services to mobile virtual network operators (MVNOs) now than they were four years ago. As more companies plan to offer mobile services, telcos must respond by increasing the prominence of wholesale within their organizations and by expanding the portfolio of services available to MVNOs. Mobile network operators can no longer rely on the quality of their networks to differentiate their offering; they must also consider the commercial terms under which they offer services to MVNOs.
Mobile wholesale strategies have changed, but there is still room for improvement
In March and April 2010, Ovum interviewed nine wholesale providers that offer mobile wholesale services for mobile virtual network operators (MVNOs). The findings of this research, and a comparison with a report we wrote after similar research four years ago, can be found in our report How telcos provide wholesale support to MVNOs.
We discovered that telcos are no longer worried that wholesaling mobile services will threaten their retail business. Instead, they accept that doing so increases traffic volumes and enables them to reach market segments that their existing retail operations could not otherwise serve. Furthermore, carriers have realized that if they do not offer wholesale mobile services, their competitors will.
Nevertheless, some telcos are moving into this market with extreme care, limiting the number of new MVNO opportunities that they consider and thereby limiting their potential revenues from wholesaling mobile services. On the other hand, a few operators are aggressively exploiting this market to sign new contracts and add more subscribers to their networks.
Wholesale mobile service portfolios need to expand
Carriers should not be obliged to offer exactly the same portfolio of mobile services to retail customers that they do to MVNO customers in their home market. They should be free to develop new services for specific MVNO or retail customers, but we would caution against offering cut-down service portfolios to MVNOs to limit competition with the in-house retail mobile division.
A lot of new entrants are joining the market for wholesale mobile services (including fixed operators, ISPs, retail brands, M2M service providers, and systems integrators), but now they are more interested in adding mobile broadband to their portfolios rather than simply adding mobile voice services. Wholesale mobile service providers must respond to this demand with a suite of services tailored to MVNOs evolving requirements.
Wholesale mobile revenues and profits will grow for wholesalers who can differentiate
Four years ago, when we conducted similar research into the wholesale needs of the MVNO market, we found that wholesaling of mobile services had a reputation for generating little profit for mobile network operators (MNOs). However, we believe this has changed, and several players are now earning significant revenues and margin from this sector. In the future this segment will become even more valuable as new services with higher margins (such as mobile data and mobile broadband services) are rolled out to more wholesale mobile customers.
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