Telecom: Mobile Virtual Network Operators

Apparently two US based mobile virtual network operators (MVNOs) might merge. SK might purchase both Helio and Virgin Mobile USA. Interestingly, one the web pages where they define their raison d'etre, states that one of Helio's advantages is a lightening fast network. Apparently, Helio's network as well as Virgin Mobile's are both owned and operated by Sprint Nextel.

Wikipedia's explanation for the existence of the MVNO niche is rather interesting...

MVNOs Classification and Marketing strategies

• Discount MVNOs provide cut-price call rates to market segments.

• Lifestyle MVNOs like Helio focus on specific niche market demographics.

• Advertising-funded MVNOs like Blyk or MOSH Mobile build revenues from advertising to give a set amount of free voice, text and content to their subscribers.

There are three primary motivations for mobile operators to allow MVNOs on their networks. These are generally:

• Segmentation-Driven Strategies – mobile operators often find it difficult to succeed in all customer segments. MVNOs are a way to implement a more specific marketing mix, whether alone or with partners and they can help attack specific, targeted segments.

• Network Utilisation-Driven Strategies – Many mobile operators have capacity, product and segment needs – especially in new areas like 3G. An MVNO strategy can generate economies of scale for better network utilisation.

• Product-Driven Strategies – MVNOs can help mobile operators target customers with specialised service requirements and get to customer niches that mobile operators cannot get to.

MVNO models mean lower operational costs for mobile operators (billing, sales, customer service, marketing), help fight churn, grow average revenue per user by providing new applications and tariff plans and also can help with difficult issues like how to deal with fixed-mobile convergence by allowing MVNOs to try out more experimental projects and applications. The opportunity for mobile operators to take advantage of MVNOs generally outweighs the competitive threat.