Valtech Services for Mobile Virtual Network Operator (MVNO) Mobile Virtual Network Enabler (MVNE

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Dirk Rejahl, Head of Business Line Telecommunications, Valtech GmbH

Abstract
The mobile virtual network operator (MVNO) business model is currently a widely discussed topic in the industry. For many companies it is the ideal model for a sustainable and profitable extension to their business. Even for small and medium sized companies, the introduction of a MVNO business model is a good opportunity to position themselves in the mobile telecommunication market with a target-group specific offer. This paper briefly explains the MVNO and MVNE business models and outlines proposed solutions. The basic challenges are associated with the integration of business processes and systems. Due to our unique approach and deep industry and technology know-how, Valtech is the optimal consultancy and implementation partner for this task.

About Valtech GmbH
Since 1993, Valtech has worked on more than 1,000 projects and helped improve the competitive position of companies including Vodafone, BMW, Air France, Sydbank, AXA Group and ThyssenKrupp. More than 1,100 consultants and IT specialists in 8 countries supported these companies in planning and implementing integrated IT solutions to optimise business processes. In the telecommunications industry, Valtech focuses on customer-related business processes and their mapping on web portals, as well as on the technical integration of system and domain spanning business processes such as order fulfilment and provisioning processes. Val tech's DuoShore concept offers distributed software development and quality assurance via global sourcing (e.g. with Valtech India).

Contact
Valtech GmbH Am Wehrhahn 39 D-40211 Duesseldorf Tel: 0211 - 179 237-0 Fax: 0211 - 179 237-19 E-mail: telco@valtech.de Web: www.valtech.de

White Paper

March 2006

© Valtech GmbH 2006

............................. 11 3................................ 4 1.................. 10 3 Valtech Service Offering .......................... 9 2..................2 Business process and system integration.............................................................................................................................................................................................. 9 2..................2........................................................................................1 Definition and integration of business processes .................................... 4 1......................... 11 3.....................Content 1 The MVNO business model in a shifting market............................................................................ 4 1...........................1 Setup of mobile subscribers ........................2..................3..............3....................................................4 Provision of own products and services ...................................... 9 2........................................................ 7 2.............................................3 Mobile Virtual Network Enabler (MVNE)..... 8 2.............................................3...........................................................1................2 Integration of business processes ...............2 Established and future cooperation models................. 14 Page 2 © Valtech GmbH 2006 ..........................................1 Reseller................................................................. 12 3..............................................1 MVNO business models..... 9 2................................... 6 2 Critical success factors for MVNOs ...............................1.................3 Technical integration with the cooperation partner ...............................................2 Service Provider-MVNO (SP-MVNO) ..............1........................ 9 2..............................................................................................................................................................3.....................................................................4 Full-MVNO ................. 11 3..........................3 Complaint management and SLA monitoring...............2 System integration ...................................................1. 4 1...3 Enhanced Service Provider-MVNO (ESP-MVNO) ...................................... 3 1........3...............4 Mobile portals...... 7 2......................................................................................2 Charging for mobile services ......3 Online business............................................1 Choice of the business model................ 13 4 Glossary........................5 Online business und online cooperation.................................................................... 12 3.............................................................................................................. 5 1........................................................1 Value proposition of the Valtech approach ................................................................... 4 1............ 11 3.........................................................

offer them services and charge these services to the customer. has been accessible only to a small number of market participants. Addressing small and medium sized customer segments and competing on specific services are taking a back seat. This is why mobile network operators in Europe are searching for new ways to develop . The "mobile virtual network operator" (MVNO) business model allows a mobile network operator (MNO) to give other companies access to its network infrastructure. MVNOs can provide customers with their own SIM cards and receive their own network destination code (NDC). On the other hand. If the high barriers to entry. mobile network operators have concentrated on developing their international businesses.unaddressed customer segments. could be overcome. including legal and regulatory constraints and large investment requirements. and innovative business ideas are required to achieve effective growth. and thus are hard to reach with the operator’s existing brands and products. Customer relations are managed by the MVNO and the subscribers are anonymous to the MNO. Many European mobile network operators plan to accelerate the development of new markets and customers via cooperation with MVNOs Page 3 © Valtech GmbH 2006 . these providers will. Also the rules of the game are changing. in future. to set up participants on the network. owing to its regulatory conditions.at least indirectly . mobile telecommunications is a particularly profitable business that. the European mobile telecommunications market has shifted from a growth market to a saturated market. At the same time.1 The MVNO business model in a shifting market During the last couple of years. As a result of increasing cost pressures. These customer segments are typically found beyond the primary target market. focus more and more on products that will be accepted by as many customers as possible in an international environment. many companies would be interested in entering this market.

1 Reseller In the reseller model the MVNO resells mobile services. 1. The MVNO provider operates its own core network and offers its customers a product and services range that is completely independent from the MNO. typically prepaid contracts. is usually maintained by the MNO. MMS. which means that the MVNO hands the customers over to the MNO. 1.1.3 Enhanced Service Provider-MVNO (ESP-MVNO) In the enhanced service provider model. In contrast to the former.1. however. Page 4 © Valtech GmbH 2006 .1.) but its own value-added services as well.1. the customer relationship is maintained between the MVNO and the end customer. The customer relationship. the service provider offers its customers the MNO’s mobile services. LBS etc. 1.1 MVNO business models There are different MVNO business models that vary in their degree of vertical integration. As the customer relationship is established between the MNO and the end customer.2 Service Provider-MVNO (SP-MVNO) Similar to the reseller model. however.1.4 Full-MVNO The full MVNO only uses the MNO’s radio network. the reseller is not an MVNO in the actual sense. the MVNO offers its customers not only the mobile services of the MNO (typically wholesale products like SMS. Figure 1: The primary value-added chains in mobile telecommunications There are 4 categories of business model that are referred to as MVNO models: 1.

Normally. It has neither a radio network nor a core network. The technical integration depth. as this would involve changing to a post-paid model. Here. Future MVNO cooperation agreements will therefore show a higher vertical integration of the MVNO. only special tariffs are possible. the actual mobile subscription contract is usually accomplished between the MNO and the end customer. Using today’s reseller models. will usually not reach that of a full MVNO that operates its own telecommunications infrastructure. companies will find it difficult to gain advantage based on key differentiators. In addition.2 Established and future cooperation models The existing “MVNO-like” business models are usually reseller models in the prepaid segment. which means to its telecommunication network. the MVNO does not have to operate its own telecommunication infrastructure but “simply” needs to integrate customer management and accounting processes with its existing business processes and realise the technical connection to the MNO’s interfaces. The MVNO can offer post-paid contracts with its own tariff models and concepts on the market.1. Business models should thus provide for connection to one or more SP MVNOs. Thus. An MVNO does not have a net infrastructure of its own. offers such as target-group specific products and services can be realised only to a very limited degree. which means the MVNO sells branded SIM cards with handsets or other terminals via its own distribution channels. Such a change is hardly feasible since in the system landscape of a mobile network provider (and usually in the business processes as well) prepaid and post-paid are completely different from each other. Due to the low level of integration. This is the reason why future MVNO cooperation will tend to focus on post-paid models. The connection is made via two defined interfaces. This model has the benefits of comparably low initial investment and low risks. Page 5 © Valtech GmbH 2006 . but it can only add limited value – and thus margins remain low. In the ideal case. it will be connected to the MNO’s OSS. intelligent network components. Another disadvantage of this model is the missing (or extremely intricate) migration path to models with a higher degree of vertical integration. however. one to provisioning (the setup of participants) and one to CDR collection/mediation (the capture of usage data). the MVNO can also offer value-added services that do not require an own OSS infrastructure: for example. It can therefore offer target-group specific products and services that enable competition-differentiating positioning on the mobile telecommunication market.

1. In principle. However. Page 6 © Valtech GmbH 2006 . has already been established in fixed network communications. particularly in the regional carrier market segment. A similar business model.3 Mobile Virtual Network Enabler (MVNE) The mobile virtual enabler (MVNE) company addresses business process domains from the mobile telecommunications value chain that the MVNO cannot map or does not want to map itself. this advantage has to be balanced against additional integration complexity and a potentially limited agility of the MVNO. as no specific know-how has to be built up and there is a lower commercial risk in comparison to the MVNO realising its own business process operation. the MVNE can also take processes from the application & service delivery or customer care. Figure 2: The MNVE in the value chain It can be quite attractive to MVNOs to outsource parts of the business process to an MVNE. that of the billing service provider. A typical domain taken from an MVNO is billing.

1 Choice of the business model Choosing the right business model is the primary determinant of success or failure of the project. Choosing the business model usually requires a feasibility study carried out together with the potential MNO. Thus. the basic challenges are the integration of the new business processes and systems with the MVNO’s existing process and system landscape. the following aspects of the potential cooperation and business model should be highlighted by this study: Choice of the MVNO business model (from reseller to full MVNO) Choice of either prepaid or post-paid model Definition of the target market and identification of core products Outsourcing of business processes to an MVNE Page 7 © Valtech GmbH 2006 . costs and success risks are controllable at any time. meaning the vertical integration and the integration depth in telecommunications’ value chain. It is also imperative to choose a course of action that allows step-by-step entry to the market and validation of basic assumptions regarding the business success and the impact on the existing business segment at a very early stage. and the management of costs and risks. the choice of either a prepaid or post-paid model is also required at an early stage (see also chapter 1.2: “Established and future cooperation models”). This includes defining which MVNO model should be targeted. Additionally. the first commercial start should be made as soon as possible in order to receive early feedback. Amongst others.2 Critical success factors for MVNOs An MVNO has to contend with the following critical success factors when entering the mobile telecommunication market: Time-to-market Low entry and operating costs Choosing the most suitable business model and the associated integration depth in the value chain of mobile telecommunications Possibly lacking know-how on mobile telecommunication processes and business models Integration of “new” customer processes with the existing CRM process model Technical integration with the cooperation partner Apart from choosing the business model. Due to an MNO’s typical system and process landscape. 2. Systematic feedback cycles make it possible to include the commercial and technical experiences when realising the next step.

Page 8 © Valtech GmbH 2006 . respectively to billing service providers Accounting ERP Integration for debtors management / collection / account receivables Misuse detection Fraud detection & prevention Number & SIM inventory management Administration of the mobile subscriber integrated services digital network number (MSISDN) SIM-management The basic challenge is that the MVNO is usually unfamiliar with these business processes and the impact of integration with existing business processes is difficult to evaluate.Both the business processes that have to be defined and integrated with the MVNO’s existing “business process world” and the systems’ technical integration needs can be deduced from the choice of business model and its resulting vertical integration.and cross-selling / marketing of products and services to existing customers Mediation / rating / billing CDR collection Linking of rating and billing systems. packs and accessories Order management Activation of subscribers and setup of booked services (provisioning) Sale of handsets. and accessories Websales / POS Customer care Customer management Contract management Complaint management Up. other terminals. industry-spanning process know-how on telecommunications and on the core industry of the MVNO is mandatory. 2.2 Integration of business processes The following business processes of the MVNO – adapted to the specific business model – have to be defined and integrated with the existing business processes: Marketing and sale of mobile services and products Innovation and product management Definition of tariffs and services Definition of offers on terminals. Thus.

3. Since these services are usually attached to the MNO’s basic services.1 Setup of mobile subscribers There are usually no standardised interchange formats for order and provisioning data that include all tariffs and additional services. especially for the setup of mobile subscribers.3 Technical integration with the cooperation partner As the MVNO’s business processes are usually system-spanning and strongly geared to the existing business processes. this is a strongly heterogeneous system landscape that partly contains legacy systems as well. the integration of suitable interfaces is necessary for measuring SLA compliance parameters and for escalation in case of an SLA breach. corresponding interfaces to the MNO have to be developed. it is absolutely necessary to build a secure high-performance system interface for provisioning between the MVNO and MNO.3. the service level agreement (SLA) and the realisation of the corresponding monitoring and escalation processes are absolutely necessary in order for the MVNO to give and meet quality warranties given to its customers 2.3 Complaint management and SLA monitoring For the MVNO’s complaint management. it needs a suitable service platform that provides these services and transfers the consumption data to the accounting systems. Typically. and converted if necessary. there has to be a suitable point in the billing chain of the MNO where the consumption data (CDR) of the MVNO’s end customers can be extracted. 2.2 Charging for mobile services In a post-paid model. Page 9 © Valtech GmbH 2006 .3. However. With MNOs we typically find a systematic mapping of the business processes that does not show open interfaces at the necessary places. one of the major technical challenges is the integration of the IT systems.For the integration of business processes. 2.3. The CDR has to be pre-processed. 2. The following chapters describe the categories of these technical interfaces between MVNO and MNO or MVNE and MVNO that have to be realised. and transferred to the billing systems of the MVNO or the MVNE. internal accounting also needs this data to be able to trace the accounting between MVNO and MNO. 2.4 Provision of own products and services If the MVNO wants to offer its own services as an ESP-MVNO or full MVNO. On the other hand. in order to avoid technical complaints from MVNO customers coming to nothing. This is necessary in order for the MVNO to settle accounts for mobile services with the end customers. Furthermore. suitable interfaces have to be built and connected to the complaint management system of the MNO.

The increasing integration of the business world leads to the necessity of enhancing one’s own portfolio with complementary offers through partner companies. the MVNO’s development of new sales channels is also an important success factor to achieve an optimal sales channel mix. In order to achieve a cost advantage over the traditional mobile network providers. These new internet applications usually have to be integrated seamlessly with the MVNO’s existing internet offer in order to be accepted by the end customer. internet portals are an important – if not the most important – communication channel for the interaction with customers. Page 10 © Valtech GmbH 2006 .3.5 Online business und online cooperation In many MVNO business models. customer self-service functions via an internet portal are indispensable as a substitute for expensive customer care organisations.2. On the other hand.

for the MVNO segment with a medium or small number of customers. the time-to-market aspect. 3. combined with high entry costs. the business model and the business processes. 3. Page 11 © Valtech GmbH 2006 . the so called "agile unified process". Thus. not as a single long-term project.1 Definition and integration of business processes In the course of workshops. and there is always the possibility to “correct the course”. are huge barriers. High Value First – functions of value in early phases High Risk First – early elimination of risks Small Steps – continuous success control .1 Value proposition of the Valtech approach Our consultancy and solution approach is based on Valtech's standard procedure. The central paradigm of this approach is to realise a complex scheme iteratively. especially under technically and organisationally complex conditions. 3. which means not only on the technical level but also for the preparation and implementation of the business concept. as well as of companies in other industries. Knowledge gained can flow into later stages.and with less capital expenditure. the business processes necessary for the chosen business model and the interfaces to the existing business processes of the future MVNO are first of all identified and prioritised according to the “High Value First” and “High Risk First” described above. The central principle of the “agile unified process” applies here as well. Valtech applies best practices to carry its knowledge into projects. Valtech uses this methodological approach on all levels and in all phases of a project. Valtech has a unique market position as this concept allows us to also realise MVNO business models for medium and small sized companies. especially given the number of providers already in the market.early feedback Thus. The Valtech approach makes special allowance for this fact.2. a complete and usable part of the scheme is finished. which means tackling it in manageable stages. the MVNO is able to launch its first commercial services and make its first quick wins after only a short time . from many projects. After each stage.2 Business process and system integration Valtech has gained profound knowledge of the business processes of mobile network operator.3 Valtech Service Offering Valtech GmbH is a business consultancy company and IT service provider for MVNO and MVNE. Notably. Valtech has successfully applied this procedure more than 100 times.

tests and quality assurance. service oriented architectures (SOA) have been established as the appropriate architecture concept. the expected life cycle of the application and the usability requirements of the primary target group. especially for mobile telecommunications. Valtech focuses on standard compliant approaches including service oriented architectures and web services. completely or in parts. These portals can cost-efficiently be used for customer self-management. as there is minimal expenditure needed for development. Valtech adds its profound knowledge on quality assurance and tests to integration projects. order processing. as a deep integration usually involves expensive changes to the system. Valtech has successfully realised distributed and system spanning business processes in rapidly growing IT landscapes.This prioritised list of business processes will be converted into a plan that maps the implementation of these processes to different project phases. e. particularly with the integration of legacy systems. Valtech focuses on standard products and technologies. including J2EE. The integration steps derived from this prioritisation guarantee an early commercial start with low risks. The integration on an architecture level as close as possible to the business processes makes sense from a financial point of view as well.g. The most important criteria for the choice of approach are the technical requirements. Page 12 © Valtech GmbH 2006 . if desired) and for all customer related processes. Valtech’s special duoshore approach has been proved and tested in similar project scenarios. software adjustments and essential quality assuring measures can be outsourced offshore. This is often not desirable when critical business processes are concerned. Sevenval FIT and XML technologies. For this kind of system environment.3 Online business Valtech has a long experience in designing and realising customer and partner portals. This ensures optimal protection of investment alongside high cost-effectiveness and optimal time-tomarket. and uses standard development approaches.2. 3. 3. Besides the necessary adjustments and software development. billing (including online payment. For the realisation of system spanning business processes. If necessary.2 System integration In numerous integration projects. Its main benefit is the loose coupling requirements.

this increases customer retention by using target-group specific content.4 Mobile portals The enhanced service provider MVNO (ESP-MVNO) enhances MNO services with its own content and services. Figure 3: Sevenval FIT Mobile Valtech focuses on an incremental procedure to minimise commercial risks. Page 13 © Valtech GmbH 2006 . The existing content of third party suppliers is usually integrated with the help of established standard products by Valtech’s technology partners. Even new handsets can be supported immediately. In a second step. On the one hand. adjusted. First of all. the support of various out-of-the-box handsets. the existing content of third-party suppliers will be integrated and. if necessary. The choice of standard products guarantees the integration of content and. in particular.g.3. On the other hand. e. the deeper vertical integration improves the margins of the MVNO. own content and services are incrementally realised and integrated. Sevenval FIT.

g. To date. Mobile Virtual Network Enabler: Company that carries out certain business processes for the MVNO (e. since the introduction of portable telephone numbers. Call Detail Record: Data record mapping telecommunication service usage. telephony. (Business) process responsible for the setup of a new subscriber in the MNO’s and MVNO’s OSS systems. Customer Relationship Management: All processes and systems necessary for the administration of customer relationships. CDR Core Network CRM ESP-MVNO Full-MVNO NDC MNO MSISDN MVNE MVNO OSS POS Provisioning Page 14 © Valtech GmbH 2006 . data services). Point of Sale: Shops selling products and services of the telecommunication provider. customer communication. Full MVNO: MVNO only using the radio network of the MNO. switches. Mobile Network Operator: Provider of mobile telecommunication services that operates the infrastructure and necessary systems itself and owns the appropriate license of the regulating authority. accounting). Enhanced Service Provider MVNO: MVNO offering its customers value-added services based on the MNO’s telecommunication services. Mobile Subscriber Integrated Services Digital Network Number: Telephone number of a mobile subscriber. Fixed network for the communication between radio network elements. is transferred. both signalling data and user data (e. Mobile Virtual Network Operator: Provider of mobile telecommunication services with no radio network infrastructure of its own. there is no full MVNO on the market. It uses the infrastructure of a “real” mobile network operator.g. Operation Support Systems: All systems mapping the technical functions of the telecommunication provider. The MVNO operates all other network elements (e. In a core network.g. a unique allocation no longer exists).4 BSS Glossary Business Support Systems: All systems mapping commercial business processes with telecommunication providers. and the utilisation of user data. HLR) and the core network on its own. Network Destination Code: Prefix to the telephone number indicating the network used (however.

The Unified Process (UP) provides for iterative project implementation. the customer or user of the system is involved in the project at a very early stage. The services of these components are connected via defined web services. As a consequence. Method for the realisation of projects with dynamic requirements. The knowledge gained flows into the next phase. Service Provider MVNO: MVNO offering its customers the MNO’s telecommunication services as its own. Service Oriented Architecture: Architecture approach focusing on the systems’ technical services and components. Subscriber Identification Module: Physical module (smart card) that identifies and authorises subscribers of a mobile network. In each phase a complete and expedient subset of the total functionality is realised.SLA SOA Service Level Agreement: Agreement on performance and quality standards of services. The mapping of system-spanning business processes is based on these services. SIM SP-MNVO (Agile) UP Page 15 © Valtech GmbH 2006 .

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