Can MVNOs Help Developing Countries Develop Faster?
By Mike Masnick, Tue Dec 07 21:15:00 GMT 2004

While MVNOs are showing up left and right in Europe and the US, could they be a good way to foster competition in developing nations?


Mobile phone networks in developing nations gets a lot of interest. For many, it's seen as a way to leapfrog a lack of wired telecom infrastructure to offer a state of the art mobile system, without being tied down to legacy systems. There are creative ideas on how some of the poorest nations can then use those networks to stimulate growth, even in very remote areas. Not all of the plans are well thought out, as there seems to be a general "if we build it, success will come" attitude held by many governments -- often encouraged by network equipment vendors who see developing nations with no infrastructure as a way to grow their own businesses.

Is there a better way to go mobile in developing regions? We tend to take it for granted that more competition should lead to a better outcome, with the better system (whether technically or through better marketing) winning out in the end. However, many developing nations don't have the spare money to waste on a number of systems that could all fail. Yet a government run bureaucracy is no solution either, leading to massive inefficiencies.

A middle-ground solution could be to encourage more MVNOs in developing nations. Virgin boss Richard Branson is making plenty of news this morning for talking about plans to launch Virgin Mobiles in China, but also in Mexico, South Africa and Nigeria, which makes you wonder if they would be interested in countries that are less well developed when it comes to a mobile infrastructure. The advantage of the MVNO is that it lowers the risk for all the parties. The marketing half doesn't have to worry about maintaining the network and the actual network operator doesn't have to worry about marketing to customers.

With just one or two network operators (perhaps with government backing) being opened up to MVNOs in developing nations, competition could be fostered at the customer level -- leading to more creative and efficient plans and offerings, without having to be inefficient and wasteful in building out too many expensive networks. The marketing partners get early access to developing markets and the network operators get a more stable revenue base from their MVNO partners.