Mobile Virtual Network Operators (MVNO) have established themselves firmly as the second group of mobile service providers, with more than 250 in business worldwide. Whereas the first generation of MVNOs followed a strategy of cost leadership, the second generation, including Helio, Ampd or Disney Mobile, are concentrating on differentiation to address high ARPU market segments. The planned MVNO Blyk goes one step further and puts the entire business model into question with the provision of mobile services which are partially funded by advertising, as does Senopia, a type of Mobile Virtual Network Enabler (MVNE) for end users. What kind of effect are these developments going to have on the market and competitive structures in the mobile communication industry? Mobile Network Operators need to adapt their strategies in order to stay ahead of the competition

The first generation MVNOs implemented their strategies using lean business structures and processes and the Internet as a cheap direct sales channel. Pre-paid products dominated and the providers limited their mobile services mainly to voice and messaging. This is in principle comparable to the budget airlines concept – and has led to the term ’Low-Frills MVNOs’.


The success of this business model is reflected in the development of the market shares. In Denmark MVNOs have successfully captured a 25% market share, in the USA 9% and 5% in Germany (at the end of 2006)¹. MVNOs worldwide generated a total turnover of 15.4 billion US Dollars in 2006. According to a study conducted by Jupiterresearch² this revenue is expected to increase to reach 67.4 billion US Dollars in the year 2012, with a growth in the number of subscribers from 93 million today (3.5% of all mobile subscribers) to 352 million (then 7.3%) in 2012.


Second generation MVNOs have chosen a differentiation strategy, whereby the providers don’t limit themselves to the three competitive parameters; brand, price and distribution channel. MVNOs including Ampd, Boostmobile, Helio, Kajeet and Disney Mobile are developing completely new value propositions in order to secure a sustainable competitive advantage through differentiation.


MVNOs like Helio and Boostmobile produce their own exclusive target-group oriented multimedia content and don’t rely on content licensing. They are focussing increasingly on mobile data and value added services. For example, Helio is cooperating with the popular social network platform ‚Myspace’, Boostmobile works with Loopt, a locally-based social network service. The idea behind this type of cooperation with Internet players is the extension of popular web-based platforms to include an adapted mobile component.
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