Service Without Network

How about service providers rolling out services without a network
infrastructure and radio spectrum of their own? It certainly sounds like a
lucrative proposition for mobile virtual network operators (MVNOs) who do not
want to take the pain of managing infrastructure or fight for spectrum, which is
a rare commodity. MVNOs simply want hassle-free service delivery, faster
go-to-market, subscriber ownership, and customized point solutions.

For asset-based carriers, operational support systems and business support
systems (OSS/BSS) pose several challenges in terms of maintaining network
inventory, provisioning services, configuring network components, and managing
faults, along with dealing with customers, taking orders, processing bills, and
collecting payments. And since MVNOs do not own spectrums and network
infrastructures of their own, they have business tie-ups with traditional mobile
operators to buy minutes of use (MoU) for sale to their own customers.

Key Benefits

The major benefit for host players or mobile virtual network operators like
TTSL is that they can broaden the customer base at a zero cost of acquisition.
Mobile operators find it difficult to broaden their base in all segments. Also,
many service providers have spectrum capacity, product, and segment needs in new
areas like 3G. So the MVNO model is the best way for optimum network
utilization. And, as TTSL stated during the launch of its association with
Virgin Mobile, MVNOs can help mobile operators target specific consumer
segments, like the youth segment, with specialized services. On top of these
benefits, it provides business opportunities to communication solutions
providers as well.

XIUS-bcgi, a player in the segment, identified a potential business in the
MVNO model. It has plug-n-play services like XIUS VOISE for MVNOs, helping them
escape the pain of managing the OSS and BSS.

Boon for Indian Telecom

Ever since the first commercially successful MVNO was launched by Virgin
Mobile, UK, in 1999, and after its huge success (over a 4 mn customer base at
present), the model was successfully employed by other telecos in the US and
other countries. In fact, in March this year, Virgin Mobile made an entry into
India in an alliance with Tata Teleservices on something similar to the MVNO
model.

Once this joint venture becomes successful by delivering the promises it
made, it will be an encouraging precedent for other non-telecom companies to
venture into the Indian telecom market through the MVNO model.

Some other international MVNOs that were looking to enter India are Telekom
Malaysia, Mobile ESPN, and ValueFirst. Also, Reliance Communications has
expressed its interest to adopt the MVNO business model for its GSM foray in
some telecom circles to expand its customer reach.

There are approximately 360 planned or operational MVNOs already existing
worldwide. And scores of international MVNOs are expressing interest to enter
into the Indian market. This provison of service delivery platform to MVNOs by
convergent communication solutions providers like XIUS-bcgi, might create a
separate market segment in the telecom industry. This new segment will possibly
influence Trai's Rs 1,300 crore 'net worth' criteria for granting spectrum
license. Now that the service delivery platform could be de-linked from network
by services offered by host players like TTSL and communication solution
providers like XIUS-bcgi, many small non-telecos will be encouraged to utilise
the MVNO model to provide mobile services. This might force Trai to rethink its
'net worth' criteria and bring it down considerably, encouraging new players to
operate in the traditional MNO model.

Kannan K

kannan@cybermedia.co.in