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Mobile Virtual Network Operators: Emerging Participants in the European Mobile Market
Frost & Sullivan, Oct 2007, Pages: 37
Ability to Meet Specific Needs of Diverse Social Groups Underlines Growing Appeal of MVNOs
Over the past seven years, mobile virtual network operators (MVNOs) have become relevant players in the highly aggressive European mobile communications market. In Europe alone, at the end of 2006, there were nearly 350 companies, which could be classified as MVNOs. These range from telecommunication service providers, media companies and supermarkets to banks, retailers and community groups who have entered the market without owning a network. Their core business tends to define their business models, strategies and target audience, all of which determine their performance.
There are two main elements which have facilitated the success of MVNOs in the highly competitive and saturated European mobile market. 'The first element central to their growing market presence is the ability to effectively address the specific needs of different social groups,' observes the analyst of this research. 'The second element is the capacity to offer aggressive price strategies.' Consequently, there are very successful MVNOs with subscriber numbers ranging from a few thousands to millions. In Europe, at the end of 2006, the typical number of subscribers of an MVNO could vary from 5,000 to 5,000,000.
Three-pronged Challenge Confronts MVNOs
MVNOs are empowering their market positions in Europe. Some of them are aggressively competing with mobile network operators and are effectively addressing the mobility needs of specific social groups that big mobile operators find difficult to reach. The market presence of MVNOs has grown particularly in Northern European markets, where the phenomenon started between the late ‘90s and 2000. In large northern European markets, some MVNOs claim millions of subscribers reaching market shares close to 7 per cent. While the market is mature in northern Europe, it is in its incipient stage in Southern and Eastern Europe. However, many companies across various industries have already developed MVNO operations and many other organisations are ready to enter the market. At the end of second quarter of 2007, there were 355 MVNOs in operation or ready to start functioning, with numbers set to increase over the next three years.
The success of MVNOs will depend on their capacity to offer low prices, high-quality customer care and address the needs of specific social groups. Meeting these three challenging rquirements is also critical to their being able to compete in the highly dynamic European market. 'Aggressive price strategies have helped MVNOs to attain significant market shares even as more vertical strategies, such as targeting ethnic communities, have allowed some MVNOs to move smoothly and successfully into niche markets,' states the analyst. 'For MVNOs, identifying the right market segment is key to making strong gains in the highly competitive mobile market.'
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