An Exploration of Relationships Between Mobile Network Operators (MNO) and Mobile Virtual Network Operations (MVNO) in Nigeria: A Case Study of MVNO in United States of America

An Exploration of Relationships Between Mobile Network Operators (MNO) and Mobile Virtual Network Operations (MVNO) in Nigeria: A Case Study of MVNO in United States of America

Femi Ekanoye (ICT University, Baton Rouge, USA), Temitope Olokunde (Southern University and A & M College, Baton Rouge, USA), Victor Mbarika (Southern University and A & M College, Baton Rouge, USA) and Philip Musa (University of Alabama at Birmingham, Birmingham, USA)
DOI: 10.4018/IJITN.2018040101

Abstract

Mobile Virtual Network Operators (MVNOs) are of immense value to the mobile telecommunications industry as they provide services at an affordable rate to customers and work with Mobile Network Operators (MNOs) who own the telecommunication infrastructure. This is because Mobile Network Operators sell airtime at wholesale rates to Mobile Virtual Network Operators. The Mobile Virtual Network Operators retain their brand name whilst having an arrangement with their host who is the Mobile Network Operator (MNO). This article therefore identifies the bottlenecks experienced by MNOs in establishing relationships with MVNOs in Nigeria. The article also covers the various forms of MVNO business models available in the industry and the types of policies that support the MVNO success and sustainability.
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Introduction

Mobile Virtual Network Operators are referred to as network based services, the entry process and strategies for start-ups and sustainability in some developed countries illustrates the features of competition in the sector, which is key to the mobile telecom services industry. Profiling some MVNOs in developed countries with saturated market, show that they attain success based on their strength of finding the actual and absolute match of their core business capabilities (management of large network, reputation of strong brand) and to focus on target market segment demand which is not previously filled by other operators (Corrocher & Lasio, 2013). Motivating factor for investment by MNOs has always been commercially driven rather than adopting variety of infrastructure model as mandated by the regulator (GSMA, 2008)

MVNOs are real possibilities for African countries as developing economies. The prospects are very high owing to studies that indicated that about 55% penetration of mobile telephony has been achieved, which invariably mean a window of growth to the tune of 45% is available for active subscription. Other local voice and data services offerings and consumer market segmentations can be addressed by MVNOs.

There is a strong presence of MVNOS in the developed world especially the United States of America which is a sharp contrast to the low presence of MVNOs in the developing world particularly in Nigeria. This presents a reason to explore the possibilities of developing a widespread of MVNOs across states in Nigeria. History has it that MVNO began in Western Europe and North America in the year 2002. Some MVNOs have recorded successes in many western part of the world but they have found it extremely and increasingly difficult to penetrate the emerging market of Africa, due to challenging dynamics within the continent. A MVNO is defined as a company that provides mobile communication services, sells subscriptions and bills to customers under its own brand but does not have its own spectrum license (Dahlen, Tronjeng, Deikas, & Lag, 2002).

A MVNO establishes an agreement with the Hosting Network Operator from whom it buys a wholesale network capacity to obtain essentially the same possibilities to offer mobile services to end-users as an MNO. This implies that any company, institution or brand can act as an MVNO simply by renting the required bandwidth to convey its communication and value-added services from an existing mobile operator. Relationships between Mobile Network Operators (MNO) and Mobile Virtual Network Operators (MVNO) can easily be established due to the potential to create a win-win environment on both ends. MNOs can continue to serve their customers while making bulk sales of bandwidth to companies or brands that want to function as MVNOs, thus increasing their sources of revenue.

The innovative development of MVNOs can be considered a business initiative that allows the mobile virtual network operator to have a full control over its SIM card, Network operating center, billing system, Marketing Strategy and customer care platforms. A case study of an MVNO in the United States of America ‘Boost Mobile’ is used to guide the exploratory study of possible relationships between MNOs and MVNOs in Nigeria.

Mobile Virtual Network Operators in voice, mobile commerce, mobile health and education are some of the resource area that have not been fully explored and are considered as tremendous growth opportunities in the continent. As the industry keeps evolving and transforming from merely having mobile network operators alone rendering the services of plain voice messaging, there is need for virtual operators to take advantage of the rich media and as well render complex services while riding on a host.

This research study was embarked upon for beginning a MVNO company in Nigeria using Boost Mobile operations as a barometer, and it will serve as eye opener to the enormous opportunities that exist in the telecommunication sector to intending investors. This study will profile Boost Mobile Network, USA, MTN Nigeria and Etisalat Nigeria.

The objectives of this paper are stated as follows:

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