Session IVMobile Connectivity Platforms

“A User Centric Always Best Connected

Service Business Model for MVNOs” Anwesh Adhikari

(Waterford Institute of Technology, Ireland)Miguel Ponce de Leon

(Waterford Institute of Technology, Ireland)

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Summary of the Paper

• Current state of MVNO model.• Opportunity for MVNOs in IP-based

communication services.• Introduces a new MVNO as a Broker (MVNOB)

model.• Analyses the characteristics of the conceptual

MVNOB model.

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Motivation

• Limited usefulness of technology-push factor in the diffusion and adoption of new technology and services [2].- Calls for market-pull business models.

• Growing popularity of flexible and agile business models (Eg. SaaS, PaaS).

• Service Provider Model is seen as the best framework to promote innovation in the mobile communications market [6].

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Limitations of Current MVNO Model

• Current MVNO model is based on the concept of reselling [9].

• MNOs can set the network lease prices high enough to increase the barriers to entry for MVNOs [10].- Long term viability of MVNO is unclear from the existing telecom industry structure [15].

• Promotes cost leadership over service differentiation.- Higher customer churn rate and lower profit margins.

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IP-based Application Services

• Formerly distinct industry sectors like telecom and content industries are converging over IP.

- Provides better differentiation possibilities for focussed virtual operators [10].

• Industry structure has an impact on service usage [18].

• Vertical network applications can be integrated into one IP-based convergent network for both fixed and wireless communication services [19].

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The Missing Perspective

• User-centric view.- Users contend for a network connection instead of operator networks contending to satisfy the users service.

• SAHARA model [48] considers the service composition across multiple providers.- MVNO and MNO agreements are static and agreed long in advance making user dynamic inefficient.

• Perimeter project [49] - Development of services independent and portable of the underlying access and transport network.

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Value Chain to Value Network

• Vertical integration of the telecom industry will be unable to satisfy the new range of VAS [15].- More collaborative business models based on core competencies are likely to emerge [19] [22] [26].

• Next generation mobile services will leverage robust access platforms [15], with the emergence of a dedicated service composer [26] [28].- MVNOs are in a better position to deliver innovative VAS as more tightly integrated partners with MNOs [30].

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MVNOB Business Model

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Actors and their Roles

• MVNE- Role: Technical outsourcing partner to the MVNO.

• Possible candidates: Existing MVNEs, System Integrators, Equipment vendors, Internet Services Companies, and MNOs.

• MVNO - Role: Customer facing.

• Possible best candidate: Grocery and General Merchandising Retailer.

• MVNOB = Service Composer + Retailer

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Market-pull Factors

• Cost of delivering mobile data is likely to exceed incremental revenues and become unsustainable for the mobile operators by 2013.

Chetan Sharma Consulting [43]

• Customer life-cycle management is hard to implement in pre-paid mobile services, 3/4th of the global mobile customers are pre-paid ones.

McKinsey [44]

• Flat-rate-based business model is likely to commoditise MNOs as bit pipe carriers. [43] [45]

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Revenue Model

• Reduces cost by adopting a common standard (IP).• Promotes successful resource sharing as the actors are

business-wise decoupled.• Encourages service differentiation through real-time

open negotiation for services and network access.- This will become especially prevalent with the deployment of IMS.

• Capable of supporting various billing plans, and generating a single bill for the customer of all the services consumed from multiple-MNO.- eg. pay-per use/view/time

• Possible Long Tail Effects.

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Adoption Prospects [50]

• Relative Advantage- Economic benefit of service bundling.

- Micro-segment customer offerings.

• Compatibility - Orchestration of the services from different MNO platform for customer-specific delivery is probable over the Internet Protocol.

- Major issue could be non-technical due to the likely resistance from the MNO to give away control over the service delivery.

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Adoption Prospects

Complexity- Shifts product life-cycle management from an off-line to a real-time process.

Trialability- Will mainly depend on service attributes, personalisation, and the management of personal identifiable information within the ecosystem.

Observability- Social activities like sharing and recommendation by the users are likely to have a major influence on the subscription of the services.

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Conclusions

• The suggested MVNOB model:

- Changes the telecom industry structure by introducing a service composer between the MNO and the customer.

- Envisage dynamic formation and dissolution of user-network relationships of short time-scales.

- Promotes a unique service by making available the various services from multiple-MNO under a single umbrella.

• MVNOs need to rethink their strategy and consider positioning themselves as a broker of services in a multiple-MNO ecosystem, with MVNE as their technical partner.

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Thank You for Listening!

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References

[2] R. Baskerville and J. Pries-Heje, ”A Multiple-Theory Analysis of a Diffusion of Information Technology Case”, Information Systems Journal, vol. 11(3), pp.181-212, 2001.

[6] C. Cuvelliez, ”Study of Implementation Models of Mobile Virtual Network Operator (MVNO)”, PhD Thesis, Univ. Libre de Bruxelles, Univ. DEurope, Belgium, 2006.

[9] P. Curwen and J. Whalley, ”Tele2 and the strategic role of virtual operations”, Q Emerald Group Publishing Limited, vol. 9 no. 4, pp. 55-69, 2007.

[10] T. Smura, A. Kiiski and H. Hammainen, ”Virtual operators in the mobile industry: a techno-economic analysis”, Netnomics, vol. 8, pp. 25-48, 2007.

[15] D.H. Shin and M. Bartolacci, ”A study of MVNO diffusion and market structure in the EU, US, Hong Kong, and Singapore”, Telematics and Informatics, vol. 24, Issue 2, pp. 86-100, 2007.

[18] A. Kiiski, ”Mobile Data Service Industry Structure: Walled Garden vs. Horizontal Integration”, Research Report of Networking Laboratory, Helsinki University of Technology, 2003.

[19] P.T Chen and J.Z Cheng,”Unlocking the promise of mobile value-added services by applying new collaborative business models”, Technological Forecasting and Social Change, vol. 77, Issue 4, pp. 678-693, May 2010.

[24] M. Castells, ”The information age: Economy, Society and Culture”, 2nd edn, Oxford: Blackwell, 2000.

[26] J. Hultell, K. Johansson, J. Markendahl, ”Business models and resource management for shared wireless networks”, Vehicular Technology Conference, 2004. VTC2004, IEEE, vol.5, pp. 3393- 3397, 26-29 Sept. 2004.

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References

[28] T. Kohlborn, A. Korthaus,C. Riedl, H. Krcmar, ”Service aggregators in business networks”, Enterprise Distributed Object Computing Conference Workshops, EDOCW 2009, 13th, pp. 195-202, 1-4 Sept. 2009.

[30] S. Ulset, ”Mobile virtual network operators: a strategic transaction cost analysis of preliminary experiences”, Telecommunications Policy, vol. 26, Issues 9-10, pp. 537-549, October-November 2002.

[43] Bridgewater Systems, ”Whitepaper: Towards a Profitable Mobile Data Business Model”, Available: http://www.bridgewatersystems.com/Assets/Downloads/Whitepapers/Bridgewater_Towards_a_Profitable_Mobile_Data_Business_Model.pdf [28 July 2010].

[44] A. Levisse, N. Manuel and M. Sjolund, Getting more from prepaid mobile services, The McKinsey Quarterly, 2008. Available: https://www.mckinseyquarterly.com/Telecommunications/Getting_more_from_prepaid_mobile_services_2108 [28 July 2010].

[45] A. Banerjee, Insight on Service Provider Innovation: A Global Study of Services, Emerging Business Models and Marketing Evolution. Yankee Group, 2008, Available: http://www.openet.com/company/newsevents/press-releases?id=113 [28 July 2010].

[48] B. Raman et al., ”SAHARA Model for Service Composition Across Multiple Providers”, Lecture Notes in Computer Science, Pervasive Computing, vol. 2414/2002, pp. 585-597, 2002.

[49] F. Cleary, M. Fiedler, L. Ridel, and A. Cihat Toker, ”PERIMETER: Privacy-Preserving Contract-less, User Centric, Seamless Roaming for Always Best Connected Future Internet”, Wireless World Research Forum (WWRF), Meeting 22, 5-7 May, 2009.