MVNOs Greasing The Price War Skids
By Mike Masnick, Tue Apr 05 02:45:00 GMT 2005

MVNOs have been able to fill niche markets for quite some time, but eventually there had to be more competition between MVNOs and mobile operators. With T-Mobile dropping prices for pre-pay customers, it looks like that battle is beginning.


The purpose of MVNOs, generally, was that they would help to fill a smaller market that traditional mobile operators didn't have the time, money, expertise or foresight to support. That concept would hopefully avoid MVNOs competing too directly with their own network operators -- though, it was only a matter of time before it happened.

Apparently, T-Mobile is now feeling the heat from MVNO competition in the UK, and has decided to reduce charges for pre-pay users in an attempt to stop losing business to MVNOs. Of course, T-Mobile supplies the network to many of the MVNOs in the UK, which puts them in a very awkward position.

The question, then, is what comes next? If mobile operators continue to feel the pressure from their own partner MVNO providers, things could get nasty. While an earlier lawsuit involving T-Mobile and its MVNO partner Virgin in the UK was eventually settled, there could be many more such lawsuits. Then, of course, there is the possibility of technology adjustments. While operators like the fact that MVNOs help them sell excess capacity, those operators also know what a pain it would be for an MVNO to switch to another provider without causing too much of a disruption to users. Thus, the network operators may hold the upper hand, and could either demand more from their partners, or even cut back on the services and technology they're offering (which, again, could lead to more lawsuits). The other option, of course, is that the operators may just end up buying the more successful MVNOs, while leaving the others to rot away.