Mobile Virtual Network Operatotors in Europe. Strategic and Legal analysis.

University essay from Lunds universitet/Department of Business Administration

Author: Olga Sasinovskaya; [2004-06-03]

Keywords: Företagsledning; management; MVNO;

Abstract: Nowadays more and more mobile virtual network operators (MVNOs) are entering European market and they are considered to be mostly a European phenomenon. This is the best opportunity for telecommunication companies to expand without investments in network constructing and buying expensive licenses and also an opportunity for brand non-telco companies to enter telecommunication market. This research starts with an overview of the mobile telecom industry in Europe, describing the development of GSM standard, new opportunities of UMTS network and main market players, focusing on Danish and UK mobile markets. Chapter 5 concentrates on the MVNO business model and describes different types of MVNOs, main driving forces for potential entrants, benefits and risks for traditional operators and influence of 3G environment on the main market players. In order to understand the environment MVNOs are acting in, it is essential to analyse the legal framework of the mobile telecommunication market. The provision of access to MVNOs remains one of the most controversial issues within the European Union. Most regulating bodies are in favour of MVNOs since they encourage competition and that means lower prices and greater choice for consumers. But regulators in many countries are still considering whether (and if so to what extent) regulatory intervention, including the regulation of access price and conditions are necessary. The issue of MVNO regulation remains polemical and various arguments both for and against MVNO regulation are discussed in Chapter 6. However, access to mobile networks is not mandated by the current regulatory framework, the new EC regulatory framework on telecommunications provides specific actions for mobile operators obliging existing mobile operators to unblock the access to the existing networks to MVNOs. Chapter 6 examines current legislation concerning telecom industry and its impact on MVNO regulatory aspects. Apart from the specific-industry regulations the role of general competition law remains fundamental. There is evidence of a growing number of cases which may not be covered by any sector specific regime (which cannot plan for all possible situations of innovation) and therefore they should be treated under general competition law (which by definition is cross-sector). Essential facilities doctrine is therefore applied to analyze the basic rights potential MVNOs may rely on under the EC competition law.Strategic analysis starts with examining the influence of external environment on mobile telecommunications industry and provides the analysis of the key five competitive forces within the industry and their impact on MVNO business model. Porter’s five forces help to assess the attractiveness of mobile telecom industry and advantages which potential entrants can obtain as a MVNO. PEST analysis focuses on environmental scanning, examining the influence of Political and Legal, Economical, Social and Technological factors on mobile telecom industry.Finally, generic strategies analysis provides the examples of the most successful competitive strategies employed by existing MVNOs (Virgin mobile and Tele2), and examines the advantages of those strategies in the light of the existing market conditions.