The Growing Potential of Mobile Virtual Network Operators in Spain

Ricardo Pérez. Professor. Instituto de Empresa

4 May 2006

The Spanish mobile phone market is headed for sweeping changes, spurred by the potential development of Mobile Virtual Network Operators (MVNO). The future isn’t clear but the possibilities seem endless.

The Spanish mobile telephone market is on the brink of a fundamental change. At least, that is the message the Telecommunications Market Commission (TMC) is sending operators. Now that The European Union has given its approval for the TMC to provide support for the development of Mobile Virtual Network Operators (MVNO) in Spain, two companies have shown interest in entering the market. They are both well-known and powerful corporations in Spain: The Corte Ingles and Carrefour.

Both of these companies are looking to the experience of the European market, where 200 MVNO companies are already well established. Many of these participants aren’t from the technology industry, but they do have well-known brand names capable of attracting their regular customers to their new product. The most successful example is Virgin, in the United Kingdom, where the company has almost 4.5 million clients and leads the way in offering new products to its clients. Other companies are sure to follow suit.

Another good example is Tele2, which does not have its own mobile networks. Nonetheless, the alternative telecommunications operator wants to offer a wider variety of products to its clients, much in the same way that the BT group did with its Fusion product. As mentioned in the 3GSM congress in Barcelona, companies already in the sector are expected to follow this same path. The immediate impact on consumers will undoubtedly be lower prices, especially in the lowest sector of the market. And, although the long term effect is not yet clear, this trend should launch a new generation of services.

No matter to how these changes pan out, they are likely to have a dramatic impact on the future of the sector. It is not merely a question of the client’s money, but also a question of how the market will be affected and how much investment in technology will be required. The Barcelona event made clear that the sector is moving towards more complex terminals and services, characterised by more image, sound and interactivity. Companies must invest in new terminals, as well as in new technology, in order to keep pace with change and to provide customers with the latest technology and services.

If price is the only motor of change then many future opportunities will be lost. But if the vague terms given by the TMC for promoting competition were to result in new agreements, then traditional operators would also stand to gain. Investments in services would also likely be stepped up, leading to increasingly innovative business proposals. In that case, Spain is well positioned to be a leading exporter of innovative ideas in this rapidly expanding information society.

Operators with their own network have always painted a dark picture of MVNOs, who they fear, as newcomers, will spark price wars without investing in the market. The first companies to bet on MVNOs haven’t yet made it clear as to what the future will look like. But they provide a glimpse of how sweet the cake might be and of how fast change could come.

If MVNOs are inevitable then the message from the regulator is clear: The market must get organized and the process of selecting partners for the future should be a natural part of business. What’s left to do now is to wait and see if the competition grows without having to forfeit technological innovations. It must be kept in mind that society, as a whole, is the client--a client who is desperately trying to find ways to thrive in a new world where technology is becoming the driving force behind the economy.

Last video

The Other Side: A moment in wine. Javier de Cendra

See video
Follow us
IE Focus Newsletter
IE Agenda
IE Business School | María de Molina 11, 28006 Madrid | Tel. +34 91 568 96 00 | e-mail: info@ie.edu

Contacto

IE Business School

María de Molina, 11. 28006 Madrid

Tel. +34 915 689 600

info@ie.edu