How much does it cost to establish a Mobile Virtual Network Operator
(MVNO) and what is the process involved in doing so in the UK (and Europe)?

Hi! Thanks for an interesting question.

In order to answer the costs of setting-up an MVNO, it would be good
to first identify the different types of MVNOs and then give out the
costs.

Our very first study actually almost provides a complete answer. In
this paper by S. Kristensson and A. Gahnström, we can see the
different cost configurations.


Type 1 ? The service is the same as that of the network operator.

Costs: Please take note that for the first type all the technical cost
associated with the first type of MVNO is included in the subscription
fees to the network provider.

- ?Wholesale call charges = ?(0,33 + 0,1)(2 minutes x 50 calls) = ?43?
- ?Call opening cost = ?(0.01 + 0.05)/2 x 100 calls = ?3?
- ?Wholesale subscription fee = ?(2.2 + 6.7)/2 = ?4.4?
- ?Cost for VAS = ?(0.3 + 0.5)/2 = ?0.4?
- ?Billing cost = ?(0.0022 + 0.0033)/2 x 100 calls = ?0.3?
- ?Total flexible expenditures: ?51.08?


------------------------------------
Type 2 ? The service provides additional services or advanced menus.

Costs: ?SIM card: ?1.22-5.5 /SIM (range within the advanced SIM
Tool-kit programming)?

------------------------------------
Type 3 ? The MVNO provides more advanced applications than the ones
offered by the operator. Examples of these are multiplayer games,
online communities or e-commerce.

Costs: ?IN-platform: ?2.5-5 million, depending on configurations and
its capabilities?

------------------------------------
Type 4 ? The MVNO showcases a more advanced platform such as mobile
and fixed line convergence. Traffic routing options are also available
to the MVNO.

Costs: ?GMSC costs between ?1.5 -3 million?

GMSC or Gateway Mobile Services Switching Centre ? ?the first point of
contact between the PSTN and the GSM network.?

-------------------------------------
Note Additional Cost for Types 2, 3 and 4 includes: ?Purchase of
billing platform: ?1.67 - 11 million?
Source: ?Mobile Virtual Network Operators Assessing MVNO Business
Opportunities? by S. Kristensson and A. Gahnström
http://web.hhs.se/cic/courses/underthebridge/thesis_MVNO.pdf 

Notes: Pages Include executive summary, acknowledgments, etc. Pages
refer to document pages and not PDF reader pages.

MVNO Type Classifications (See Page 37)
MVNO Technical Requirements (See Page 47)
MVNO Cost Details (See Page 78)


-----------------------------------
SETTING-UP the MVNO:

In 1999 the British Office on Telecommunications or OFTEL produced a
paper about MVNOs. Reading this provides us a good framework on how
MVNOs are set-up in the UK.

- ?In order for MVNOs to offer services to customers, they will need
to conclude commercial agreements with at least one mobile operator to
gain access to that network. If commercial agreement cannot be
reached, Oftel may be asked to intervene, potentially to decide
whether access should be allowed, on which networks and at what
price.?

- ?They would make substantial investments in facilities which would
parallel many of the functions of the mobile networks and would have
their own IN (Intelligent Network) facilities to develop value added
services. They would have extensive interconnection with fixed and
mobile networks as well as some (at least) network facilities. These
organisations would wish to depend on the mobile networks only for the
minimum services ? those that they cannot supply themselves because
they do not have licences to use spectrum.?

- ?At minimum, all MVNOs will require is the use of the radio elements
of the mobile networks and such fixed parts of the mobile operators?
networks as are necessary to route calls between the radio elements
and the first convenient points at which calls can leave (or join) the
mobile networks en route to (or from) the facilities of the MVNOs.?

- ?At the other extreme ? maximum use of the mobile operators?
facilities and minimum investment by the MVNO ? calls from MVNOs?
customers will be handled virtually entirely by the mobile networks as
if in fact they were calls from subscribers to the mobile networks.?

- MVNOs would need its own MNC (Mobile Network Code) in order to
operate SIM cards. These are usually for types 2, 3, and 4 MVNOs.

?Mobile Virtual Network Operators: Oftel inquiry into what MVNOs could
offer consumers.? By OFTEL
http://www.ofcom.org.uk/static/archive/oftel/publications/1999/consumer/mvno0699.htm


Our next article is about the basic needs of a typical MVNO. Since
these are basic requirements, it can be presumed that most are
applicable to the European setting.

- ?Most wireless operators require a $1 million deposit in order to
start the process of provisioning capacity. The deposit protects the
carrier against an MVNO failing to subscribe enough customers to pay
for the contract.?

- Getting decent wholesale prices for customer equipment like handsets.

- ?Another issue with the handset is putting a corporate logo on it.
This costs extra, and most MVNOs make do with a "splash screen," their
logo coming up when the phone is turned on.?

- MVNOs should also give a web interface to its customers.

- MVNOs will need billing and e-commerce systems.

-  Distribution of service plans and devices will also be a priority,

- The MVNO will also need a contact center to handle technical and
non-technical issues.

- The MVNO will need to distribute printed billing materials to its customers.

- MVNOs, just like any business would need marketing campaigns.

- MVNOs would need unique services and content so as to differentiate
it from other product offerings.

?MVNO Business Tempts ISPs? by  Max Smetannikov
http://isp-planet.com/fixed_wireless/business/2005/mvno.html 


Search terms used:  
Setting-up  registering forming mvno uk

I hope these links would help you in your research. Before rating this
answer, please ask for a clarification if you have a question or if
you would need further information.
                                                          
                              
Regards,                              
Easterangel-ga                              
Google Answers Researcher

Should have used Google!!
Condoleeza has found the following.However your better off selling
perhaps airtime through Globalstar or another network. I would move
towards the next 3g products, something like the a790 and resell
airtime, i.e sim cards.

Operators wanting to capture a share of the growing mobile market need
to provide advanced, innovative and scalable mobile solutions. To
evolve with the market, an operator can either partner with, or
become, a mobile virtual network operator (MVNO). Or the operator can
do both.

What is an MVNO? 
An MVNO is a mobile service provider who does not own the underlying
radio access network or the associated license but does issue its own
SIM cards. To reach its subscribers, an MVNO relies on the radio
access network of a host mobile network operator (HMNO).

Initial MVNO Success 
There are currently more than 85 MVNOs worldwide, with most located in
Europe and some more emerging in the U.S.A. and South America.
Successful MVNOs have developed win-win partnerships with HMNOs by
focusing on:

Mutually beneficial business development 
Market complementarity 
Business equity 
Two Models for Operators 
Operators can cash in on the MVNO trend by providing the
infrastructure for other companies to become MVNOs. In a country where
an operator does not have the infrastructure, the operator can use
someone else's infrastructure to become an MVNO, in order to offer a
fuller range of services to its clients. Rather than an "either/or"
approach, the key is flexibility, depending on the business case and
circumstances.

Working with an MVNO 
Multimedia services will contribute in a large part of the mobile
operators' revenue (about 40% by 2006). In response, HMVOs are
evolving from infrastructure suppliers to complex data services
packaging and selling. By entrusting part of their content delivery to
MVNOs, mobile network operators can provide more and better offerings
while lowering the level of risk. Here's what to look for in an MVNO:
A comprehensive portfolio of mobile services, including WAP,
location-based services, video streaming and mobile multimedia
messaging.

The Alcatel GPRS Mobile Applications Package solution provides a
complete, rich and integrated solution to deliver added-value services
and enable MVNOs to secure a share of the high-growth data market. And
Alcatel's flexible and scalable infrastructure solutions ensure the
continuity of services that MVNOs require in a 2G/3G environment.

How to be an MVNO
As told to Jason Meyers

Jun 27, 2005 12:00 PM


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Whitey Bluestein pioneered the mobile virtual network operator model
at MCI in the 1990s. He later helped Visage Mobile become a mobile
virtual network enabler, and now he's again advising early-stage
companies (www.whiteybluestein.com). Bluestein talked to Telephony
about market growth, carriers' wholesale strategies and what it takes
to be a good MVNO.

A recent Wall Street Journal story talked about slowing growth in
wireless penetration in Europe and Asia. An accompanying chart showed
that penetration in Sweden is 109%, and in the U.K. it is 100%, while
in the U.S. it is 61%. So there's still a lot of headroom for growth
here in the U.S.

What's going to fuel that growth? It's going to come from MVNOs, it's
going to come from the youth and prepaid market (which is driven
mainly by MVNOs) and it's going to come from data. Content and new
apps are going to drive people to get phones who didn't have them
before or to spend more. And in this area, MVNOs are going to be more
effective selling data, messaging and other content than the carriers
can themselves. MVNOs are more focused and know their customers
better, and they're building their product offerings around those
elements.

To be a successful MVNO, you need a better business model, and you
really have to have a value proposition that's going to attract and
hold on to customers. You have to find a way to dig a shallower
acquisition hole and give yourself more time for customers to climb
out of it. That's been the business from the start: The carrier digs a
hole to acquire a new customer, then hopes the customer stays on long
enough to climb out. When the customer is just about out of the hole,
they give them a new phone, with that subsidy sending them back down
the hole again. To make matters worse, as carrier acquisition costs go
up, each new subscriber has a lower ARPU than the last. Classic
carrier economics won't work for a successful MVNO.

 Related Articles 
 

How to be an MVNO, part 2
Although he didn?t get credit for the MVNO acronym, wireless
entrepreneur Whitey Bluestein pioneered the concept of the mobile
virtual network operator when he developed a virtual network operation
for MCI in the mid 1990s. Here?s more of Bluestein?s interview with
Telephony...
 
I spoke with someone the other day who wants to be an MVNO. I asked,
?Do you have a strong brand? Do you have stores or a distribution
network? Do you have an existing customer base? Do you send bills to
people? Do you have a Web site that draws potential customers? How are
you going to build a business in a way that reduces acquisition cost
from what it is for carriers today, which is in the $350 to $375
range, and reduce churn, which can be as has as 3%??

Things are also getting interesting on the carrier side. I've believed
for some time that the first carrier to truly embrace the wholesale
market will own it. That's why I think Sprint's MVNO and wholesale
strategy is brilliant, and why other carriers are starting to look
more and more at wholesale strategies. It drives growth and makes
money from the very first minute sold.

Cingular and Verizon both have very good wholesale programs, too. I
just don't think as companies their management has embraced the
wholesale strategy as enthusiastically or moved as aggressively as
Sprint has. Sprint has an elegant network ? single band, single
technology, built to a single spec ? which has kept their cost
structure down. In contrast, both Cingular and, before it, AT&T
acquired diverse networks, which can be both an integration and cost
challenge.

But don't count Cingular or T-Mobile out. There's strong demand for
GSM among MVNOs planning to sell into the ethnic market. They want to
sell GSM. And when you're looking at a prepaid offering, GSM handset
costs are still less. Cingular has a huge opportunity if they can win
this business.

Every aspiring MVNO still goes through Visage Mobile. Their first stop
on the carrier side is usually Sprint ? then Cingular and Verizon ?
and their first stop on the MVNE side is Visage. What Visage has built
is clearly a first-class, carrier-grade operation. There are a lot of
other people that would like to have what Visage has built, but they
don't. Visage has been the leader for years because it was built from
the ground up to enable MVNOs.

I've heard people say that MVNOs will build out their own
infrastructure, but I'm not seeing it. Who wants to spend tens of
millions of dollars building out infrastructure? Whether in retail,
entertainment, finance, or cable and telecoms, these MVNOs are not
rushing out to build their own service platforms.

There are a lot of things going on again in wireless and the
technology world. There's a lot of innovation. People have climbed out
of the foxholes and are really doing a lot of cool stuff. Companies
are getting funding, and they're moving forward. It's a very exciting
time again.

--As told to Jason Meyers

One more thing...
UK Mobile Virtual Network Operators (MVNOs) growing out of their niche




-/10 March, 2005 - The Wi-Fi Technology Forum/-UK based mobile
consulting firm Mako Analysis has announced that the UK could have as
many as 15 mobile phone operators selling branded services by
Christmas 2006. The rise in the number of Mobile Virtual Network
Operators, or MVNO?s, they claim is down to an increasing number of
firms looking to extend their service portfolio into the mobile space
and a relaxing of incumbent mobile operator selection criteria for
potential wholesale partners.

For a number of years in the mobile industry the term Mobile Virtual
Network Operator or MVNO represented a section of the market that
could not be described as anything other than niche. Virgin Mobile
enjoyed the crown of having perhaps the most successful international
MVNO operation for a period following its launch in 1999. Even this
seemingly stable outfit was not without its critics however as
Virgin's business model never saw them rack up incumbent operator
rivalling connection figures despite launching at the peak of the
mobile telecoms boom. With the close of Virgin Mobile's Singapore
outfit in 2002 it seemed the MVNO model would never pose a serious
threat to the established cellular networks.

At the same time Virgin Mobile Singapore was starting to hit its rough
patch, a new operation with an innovative approach to the MVNO
business model started to gain favour with the Danish public. Telmore
came aggressively into the market with an economically streamlined web
based SIM card only proposition. This low overhead operation allowed
the company to deliver some compelling pence per minute and SMS
pricing the likes of which had never been seen in the Danish market.

Mako Analysis states points out that the Danish public clearly
responded very favourably to this development, with Telmore acquiring
a 10% market share in only 3 years. Denmark is now one of the cheapest
markets in which to be a mobile phone user, with the average cost of
making a call now being half of what it was prior to Telmore's entry.
Today Denmark has nine mobile operators, both traditional and virtual
in a country with fewer than 5 million inhabitants. Mako however poses
the question that with so many potential service providers for such a
small population has healthy competition been replaced with consumer
confusion, or to put it simply how many mobile operators, of whatever
persuasion, does a country need?

For analogous markets Mako Analysis takes a look at the reselling of
services in other markets such as fixed line calling, internet service
provision or even general utilities such as electricity or gas,
stating that it is clear that these markets will support a great deal
of competition. In the UK for example, it is possible to purchase some
kind of broadband internet service from over 100 different providers.
Now we can all agree that the mobile market is somewhat different to
broadband access due to the unrestricted nature of the broadband
infrastructure network in the UK. Mako feels a potential MVNO
operation may not be so different however as the barriers to entry
seem to be eroding.

In Mako?s view, the two pillars of an operation such as Telmore or
easyMobile are firstly a low cost online operation and secondly an
incumbent mobile operator who is willing to provide access to their
network.

Low cost online business models are what make the internet such a
ruthlessly efficient route to market for businesses all over the
world, companies can be set up in a matter of weeks with little
financial outlay and require minimal influx of revenue to survive,
thus making them a dangerous threat.

The second piece of the puzzle however, Mako Analysis feels is a
little more challenging to acquire in many countries especially where
regulatory pressure has not been exerted upon the incumbent operators.
They do state that in the UK however T-Mobile in particular has made
it clear that it is prepared to engage in wholesale discussions with
just about any serious player who can put together a viable business
model. T-Mobile are famously the operator who first broke the wall of
silence with Stelios Haji-Ioannou to thrash out a deal for his
immanent easyMobile operation. Mako feels however T-Mobile?s more
recent deal with fixed line and broadband provider Toucan, is by far a
more concerning signal for the incumbent UK operators.

According to the UK analyst firm, Toucan is reported to have only
approx 50,000 customers subscribing to their existing services in the
UK, making the potential cross selling of a mobile proposition an
incredibly marginal revenue stream for T-Mobile, who in an average
week will connect well over 50,000 customers to their own network via
traditional means.

A Mako spokesperson stated, ?When we combine T-Mobile's apparent
willingness to entertain deals of such apparent insignificance and the
recent streamlining of their UK operation, it appears they are
reconfiguring their business to facilitate the entry of many more
MVNO's into the UK market?. It is common knowledge that UK retail
chain ASDA is assessing the launch of an MVNO operation after its main
UK rival Tesco racked up half a million customers with its mobile
proposition in approx one year. Tiscali, the European internet service
provider is also rumoured to be chasing an MVNO deal.

According to Mako, a further half dozen firms are said to be in
advanced talks with UK mobile operators (mainly T-Mobile) for the
potential launch of MVNO operations.

Given the implications of the Danish MVNO model, a relaxing of
incumbent operator wholesale deal criteria and the willingness of
brands to extend into the mobile space Mako Analysis conservatively
estimate that the UK could become a 15 player market (5 traditional
operators, 4 existing MVNO's plus 6 new MVNO operations) by Christmas
2006.
http://www.wi-fitechnology.com/displayarticle1920.html