Virtual mobile operators 'are allies not enemies'

Mobile virtual network operators (MVNOs) and incumbent operators need to work together to beef up their mobile entertainment offerings to reach wider audiences.

MVNOs with a strong entertainment brand will be "essential partners" to get network operators into the niche segments they would otherwise be unable to reach by themselves, according to analyst house Juniper Research.

Inter-operator co-operation has already begun, between Verizon and Mobile ESPN - one of the highest profile content-focused MVNOs - which is back in business on the Verizon network after closing down last year for failing to attract a significant number of subscribers.

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Juniper's report predicts consumers of mobile entertainment services will be more demanding in future - and if MVNOs and network operators are to co-exist they need to combine forces and become more user-focused and market-led, rather than product and technology-driven.

But co-operation may not be on the cards as MVNOs have had a "largely negative impact" on network operators by taking 25 per cent of the market share in mature markets, said the analyst.

Despite MVNOs undergoing such "rapid changes" over the next few years, Juniper predicts the global MVNO revenue will increase from $15.4bn in 2006 to $67.2bn by 2012.

According to Juniper, voice-only MVNOs will struggle to stay profitable as demand for no-frills voice services falls, with only those with a strong retail brand and existing customer base set to survive over the next few years.

MVNOs in the UK have had a chequered past. EasyMobile, Stelios' no-frills MVNO, shut up shop last year and Disney ditched plans to launch an MVNO in the UK.