For a company planning to become a mobile operator, two alternative ways to enter the market exist. In addition to the traditional way of acquiring a spectrum license and building a mobile network, market entrance is also possible by becoming a virtual operator and utilizing the existing networks of incumbent operators. Potentially, virtual operators will have an important role in shaping the mobile market structure and competition. In this paper, techno-economic modeling methods are used to analyze the position of virtual operators in the mobile communications industry. Four alternative virtual operator scenarios are constructed and analyzed using a linear, deterministic, and quantitative techno-economic model. The results highlight the importance of wholesale contracts with incumbent mobile network operators in determining the virtual operators’ business profitability. Unbalance in termination prices between fixed and mobile networks is shown to give incentives for virtual operators to invest in their own network infrastructure.
[1]
Thomas Monath,et al.
Economics of fixed broadband access network strategies
,
2003,
IEEE Commun. Mag..
[2]
Thomas Sphicopoulos,et al.
On the Economics of 3G Mobile Virtual Network Operators (MVNOs)
,
2006,
Wirel. Pers. Commun..
[3]
Svein Ulset,et al.
Mobile virtual network operators: a strategic transaction cost analysis of preliminary experiences
,
2002
.
[4]
Annukka Kiiski.
IMPACTS OF MVNOs ON MOBILE DATA SERVICE MARKET
,
2006
.
[5]
Leif Aarthun Ims.
Broadband Access Networks
,
1998
.
[6]
Thomas Sphicopoulos,et al.
The financial perspective of the mobile networks in Europe
,
2001,
IEEE Wirel. Commun..
[7]
N. Patel,et al.
A value chain model for mobile data service providers
,
2002
.