Sprint Makes MVNO Business Easier

Sprint's new Sprint Single Source Enablement effort is intended to simplify the process of becoming a mobile virtual network operator, allowing "anyone from entrepreneurs to enterprises deliver their own branded wireless service with as much or as little investment as they prefer," Sprint says.

Single Source Enablement can cover all systems, processes, customer care, online Web enablement, and the warehousing and distribution of devices so an MVNO can focus almost solely on acquiring customers.

The model can be customized to meet each MVNO’s unique business needs. Specialized customer loyalty programs and other value-added products can be supported under this model, as well.

The Sprint move illustrates a key trend within the global mobile communications business, namely the growing range of business and revenue models, with some operators emphasizing traditional retail revenues, while others move to more wholesale-centric models. Sprint is doing a bit of both, though Sprint continues to make most of its money from retail operations.

One clear conclusion to be drawn from the last decade of change in the telecommunications business is that service provider strategies, which once were quite homogenous, have become more dissimilar. Some contestants have expanded outside their “home” regions, while others have not.

Some have expanded into wireless, while others have not. Many operate their own video services, while others rely on third party partners. Some want to operate their own application stores, others would not attempt to do so.

Some service providers focus exclusively on business customers, others are more consumer focused. And those differences likely will grow, in the future.

Telecommunications service providers need to adapt their business models to a wider ecosystem and make firm decisions about which revenue sources they are going to target within that broader environment, consultants at Ernst & Young have argued.

Among the changes Ernst & Young expects to see, by about 2020, is a broader divergence in business strategies, based on reliance on “wholesale” or “retail” operations.

Today, a typical “telco” service provider has a split of revenues roughly coming half from the consumer segment, with the rest divided between business and wholesale operations.

This split could evolve by 2020 into a “smart” operator with revenues dominated by products sold to retail customers or a “lean” model rebalanced toward wholesale service provision. That will, and should, worry most executives.

The “lean” or “wholesale” model assumes a service provider becomes more a “pipe or access” provider, and less a direct retail provider of services. But it also assumes that more of the retail competition will occur between providers who source their network services from a “neutral” third party.

Current regulatory models in Singapore, Malaysia, Australia and New Zealand are examples of that approach, where all fixed network contestants will buy network services from a neutral third party.

The more speculative approach, for the moment, is an increase in network services sales to application and service providers who use network access and other services to create their own products.

Though many application providers will resist the notion, video entertainment services might well want, at some point, to source network services in ways that improve end user quality of experience, for example.

“In general, telecoms revenue mix forecasts point to an increasing shift toward wholesale,” Ernst & Young argues.  

That “wholesale” emphasis will not so much resemble traditional wholesale (carriers buying and selling access or capacity to each other) so much as enterprise sales, where capacity is sold to businesses who create products using that bandwidth.

Some examples might be sales of cloud computing services to application providers, or bandwidth products used directly by application and service providers to create streaming or other real-time services, for example. Machine-to-machine communications services provide another example.

Some service providers also will find that opportunities are greater in the business customer segment than in the consumer segment.