The Mobile Operator Squeeze
By Mike Masnick, Tue Mar 22 22:45:00 GMT 2005

With consolidation happening rapidly in the US, and questions about the market in Japan, it's time to place bets on who gets squeezed out in the UK. Can MVNOs provide the right hedge to make it through the gauntlet of operator competition?

You certainly can't claim that there's a lack of competition in the mobile operator space in many places around the world. With merger mania in the US, and some wondering if Vodafone's troubled operation in Japan may exit the market, it's clear that competition is taking its toll on the weaker players in various markets. It appears that the next market due for a shakeup may be the UK where even those involved believe that the weaker players will get pushed aside within the next year.

While the network operators jostle for position in these markets, it seems that there's no shortage of MVNOs looking to jump into the fray. Many of these MVNOs will likely go nowhere fast, but the more successful ones are only going to serve to put more pressure on the weaker operators who find themselves attacked on all sides, and limited by their spectrum, rather than afforded the flexibility of being a spectrum-less MVNO.

With that challenge increasing, it's still surprising that more network operators aren't looking to cut deals with MVNOs and become the "carrier's carrier." Since most network operators who also supply MVNOs are still offering their own direct service, it works as something of a hedge. While there are some questions about competing with partners, providing the network at least gets these providers a piece of the pie if the MVNOs can outrun the actual providers. In some cases, providing the network for an MVNO may even be a way to test certain waters risk-free, where the more successful offerings can later be bought out and brought in-house.

Of course, many network operators don't want to share their networks, and still believe they can compete on their own. Some of them may be right -- but the ones who are wrong won't be around at all in a few years.