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Valtech Services for

Mobile Virtual Network Operator (MVNO)
Mobile Virtual Network Enabler (MVNE)
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 posi-
tion 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 busi-
ness 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

.........1.................. 12 3........2 Charging for mobile services . 14 Page 2 © Valtech GmbH 2006 ......................... 3 1...........1.................................. 6 2 Critical success factors for MVNOs ................................................................................... 4 1....... 11 3.................................................................... 9 2...................1.........................1 MVNO business models.....3 Complaint management and SLA monitoring.......................... 5 1................. 4 1................. 10 3 Valtech Service Offering . 12 3........................................................................ 11 3...............................................3 Technical integration with the cooperation partner ..............................................................................................................3....1........................................ 4 1............................ 11 3........1 Choice of the business model...................................................................5 Online business und online cooperation........... 4 1............................................1 Setup of mobile subscribers ........2 Service Provider-MVNO (SP-MVNO) ...................................................................................... 4 1.......................Content 1 The MVNO business model in a shifting market........................................................... 7 2.1 Value proposition of the Valtech approach ...3 Online business........................................................................................3.......3................................................................................. 9 2.........4 Full-MVNO ..................................................................................................3 Enhanced Service Provider-MVNO (ESP-MVNO) ..................................... 9 2.................................................................................. 7 2....................................................2 System integration ..1 Reseller................................................................................................3 Mobile Virtual Network Enabler (MVNE).2 Business process and system integration............................................. 8 2......................................2 Established and future cooperation models......................................................................................................................................3...................................................................1 Definition and integration of business processes ......... 13 4 Glossary........................2 Integration of business processes .......................................2........................................................................................... 11 3................................... 9 2.............................2.......................................3............4 Mobile portals.......................4 Provision of own products and services .......................................... 9 2..........................................................................................................................

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

1 Reseller In the reseller model the MVNO resells mobile services.) but its own value-added services as well. Page 4 © Valtech GmbH 2006 .1 MVNO business models There are different MVNO business models that vary in their degree of vertical integration. the MVNO offers its customers not only the mobile services of the MNO (typically wholesale products like SMS.1.4 Full-MVNO The full MVNO only uses the MNO’s radio network. however.1.3 Enhanced Service Provider-MVNO (ESP-MVNO) In the enhanced service provider model.2 Service Provider-MVNO (SP-MVNO) Similar to the reseller model. the service provider offers its customers the MNO’s mobile services. typically prepaid contracts. 1. The customer rela- tionship. The MVNO provider operates its own core network and offers its customers a product and services range that is completely independent from the MNO. however. is usually maintained by the MNO.1.1. 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. 1. the customer relationship is maintained between the MVNO and the end customer. LBS etc. In contrast to the former. MMS. As the customer relationship is established between the MNO and the end customer. 1.1. the reseller is not an MVNO in the actual sense. which means that the MVNO hands the customers over to the MNO.

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

A similar business model. In principle. the MVNE can also take processes from the application & service delivery or customer care. particularly in the regional carrier market segment. that of the billing service pro- vider. Page 6 © Valtech GmbH 2006 . as no spe- cific know-how has to be built up and there is a lower commercial risk in comparison to the MVNO realis- ing its own business process operation. 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. However. has already been established in fixed network communications. A typical domain taken from an MVNO is billing.3 Mobile Virtual Network Enabler (MVNE) The mobile virtual enabler (MVNE) company addresses business process domains from the mobile tele- communications 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.1.

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 . the first commercial start should be made as soon as possible in order to receive early feedback. Thus. Systematic feedback cycles make it possible to include the commercial and technical experi- ences when realising the next step. costs and success risks are controllable at any time. It is also imperative to choose a course of action that allows step-by-step entry to the market and valida- tion of basic assumptions regarding the business success and the impact on the existing business seg- ment at a very early stage.2: “Established and future cooperation mod- els”). 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 1.1 Choice of the business model Choosing the right business model is the primary determinant of success or failure of the project. the basic challenges are the integration of the new business processes and systems with the MVNO’s existing process and system landscape. Due to an MNO’s typical system and process landscape. 2. This includes defining which MVNO model should be targeted. Additionally. Amongst others.2 Critical success factors for MVNOs An MVNO has to contend with the following critical success factors when entering the mobile telecom- munication 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. meaning the vertical integration and the integration depth in telecommunications’ value chain. Choosing the business model usually requires a feasibility study carried out together with the potential MNO.

respectively to billing service providers  Accounting  ERP Integration for debtors management / collection / account receivables  Misuse detection ƒ Fraud detection & prevention  Number & SIM inventory management ƒ Administration of the mobile subscriber integrated services digital network number (MSISDN) ƒ SIM-management The basic challenge is that the MVNO is usually unfamiliar with these business processes and the im- pact 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 busi- ness model and its resulting vertical integration. Thus. other terminals.and cross-selling / marketing of products and services to existing customers  Mediation / rating / billing ƒ CDR collection ƒ Linking of rating and billing systems. 2. and accessories ƒ Websales / POS  Customer care ƒ Customer management ƒ Contract management ƒ Complaint management ƒ Up. industry-spanning process know-how on telecommunications and on the core industry of the MVNO is mandatory. Page 8 © Valtech GmbH 2006 .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 ƒ Definition of tariffs and services ƒ Definition of offers on terminals. packs and accessories  Order management ƒ Activation of subscribers and setup of booked services (provisioning) ƒ Sale of handsets.

and converted if necessary.3.3 Technical integration with the cooperation partner As the MVNO’s business processes are usually system-spanning and strongly geared to the existing business processes.1 Setup of mobile subscribers There are usually no standardised interchange formats for order and provisioning data that include all tariffs and additional services.3 Complaint management and SLA monitoring For the MVNO’s complaint management.3.For the integration of business processes. Typically. The following chapters describe the categories of these technical interfaces between MVNO and MNO or MVNE and MVNO that have to be realised. internal accounting also needs this data to be able to trace the accounting between MVNO and MNO. one of the major technical challenges is the integration of the IT systems. and transferred to the billing systems of the MVNO or the MVNE. Page 9 © Valtech GmbH 2006 . in order to avoid technical complaints from MVNO customers coming to nothing. corresponding interfaces to the MNO have to be developed. Since these services are usually attached to the MNO’s basic services. 2. the integration of suitable interfaces is necessary for measuring SLA compliance parameters and for escalation in case of an SLA breach. This is necessary in order for the MVNO to settle accounts for mobile services with the end customers. suitable interfaces have to be built and connected to the com- plaint management system of the MNO. especially for the setup of mobile subscribers. The CDR has to be pre-processed. this is a strongly heterogeneous system landscape that partly contains legacy systems as well. it needs a suitable service platform that provides these services and transfers the consumption data to the accounting systems.4 Provision of own products and services If the MVNO wants to offer its own services as an ESP-MVNO or full MVNO. it is absolutely necessary to build a secure high-performance system interface for provisioning between the MVNO and MNO. 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. On the other hand. there has to be a suitable point in the billing chain of the MNO where the con- sumption data (CDR) of the MVNO’s end customers can be extracted. 2. However.3. 2.2 Charging for mobile services In a post-paid model. With MNOs we typically find a systematic mapping of the business processes that does not show open interfaces at the necessary places. 2.3. Furthermore.

These new internet applications usually have to be integrated seamlessly with the MVNO’s existing in- ternet offer in order to be accepted by the end customer.3.2.5 Online business und online cooperation In many MVNO business models. In order to achieve a cost advantage over the traditional mobile network providers. Page 10 © Valtech GmbH 2006 . internet portals are an important – if not the most important – commu- nication channel for the interaction with customers. the MVNO’s development of new sales channels is also an important success factor to achieve an optimal sales channel mix. The increasing integration of the business world leads to the necessity of enhancing one’s own portfolio with complementary offers through partner companies. customer self-service functions via an internet portal are indispensable as a substitute for expensive customer care organisa- tions. On the other hand.

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

g. This is often not desirable when critical business processes are concerned. billing (including online payment. For this kind of system environment. If necessary. Valtech focuses on standard products and technologies.2. The most important criteria for the choice of approach are the technical requirements.This prioritised list of business processes will be converted into a plan that maps the implementation of these processes to different project phases. as a deep integration usually involves expensive changes to the sys- tem. The integration steps derived from this prioritisation guaran- tee an early commercial start with low risks. software adjustments and essential quality assuring measures can be outsourced offshore. e. For the realisation of system spanning business processes. if desired) and for all customer related processes. Valtech has successfully realised distributed and system spanning business processes in rapidly growing IT landscapes. as there is minimal expenditure needed for development. the expected life cycle of the application and the usability requirements of the primary target group. Sevenval FIT and XML technologies. 3.3 Online business Valtech has a long experience in designing and realising customer and partner portals. including J2EE. tests and quality assurance.2 System integration In numerous integration projects. Valtech focuses on standard compliant ap- proaches including service oriented architectures and web services. The integration on an architecture level as close as possible to the business processes makes sense from a financial point of view as well. service oriented architectures (SOA) have been established as the appropriate architecture concept. 3. completely or in parts. This ensures optimal protection of investment alongside high cost-effectiveness and optimal time-to- market. Besides the necessary adjustments and software development. particularly with the integration of legacy systems. Its main benefit is the loose coupling requirements. Valtech’s special duoshore approach has been proved and tested in similar pro- ject scenarios. Page 12 © Valtech GmbH 2006 . especially for mobile telecommunications. and uses standard development approaches. Valtech adds its profound knowledge on quality assurance and tests to integration projects. order processing. These portals can cost-efficiently be used for customer self-management.

On the other hand. this increases customer retention by using target-group specific content. Sevenval FIT. in particular. the deeper vertical integration improves the margins of the MVNO.3.4 Mobile portals The enhanced service provider MVNO (ESP-MVNO) enhances MNO services with its own content and services. e. Figure 3: Sevenval FIT Mobile Valtech focuses on an incremental procedure to minimise commercial risks. First of all. Page 13 © Valtech GmbH 2006 . The choice of standard products guarantees the integration of content and. Even new handsets can be supported immediately. own content and services are incrementally realised and integrated.g. The existing content of third party suppliers is usually integrated with the help of established standard products by Valtech’s technology partners. adjusted. On the one hand. the existing con- tent of third-party suppliers will be integrated and. if necessary. the support of various out-of-the-box handsets. In a second step.

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

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