Mobile virtual network operators act as wholesalers to the carriers for end customers, by buying in bulk airtime, text messages and Internet data and repackaging it to customers as different deals, usually with either different benefits or sometimes plain and simpler cheaper prices. As such, a mobile virtual network operator has to cooperate with one or more partner networks, toeing the line between offering too-cheap prices (and so damaging the relationship with the partner). In some cases, a mobile virtual network operator has such a good idea that the partner network buys into (or sometimes all of) the business, such as UK carrier O2 and the giffgaff MVNO.
In Europe, mobile virtual network operators have formed a new association called MVNO Europe, which is designed to give them a stronger voice in the changing European regulatory landscape. The association has evolved from the former European Association of Full-MVNOs, or EAFM, and is founded by MVNOs from Italy, France, Greece, Belgium, the Netherlands and Germany. MVNO Europe explained that its main objective is to create a legal and regulatory framework ensuring fair access conditions across the entire wholesale mobile market and fair competition in the retail market. It will advocate the creation of a single European telecommunications and digital services market and fair spectrum allocation.
Mobile network virtual operators believe they need to utilise their collective bargaining force because of the fundamental changes within the European mobile telecom market, which owes to a combination of another round of operator consolidation, the removal of roaming fees and the introduction of cross-border services, which is seeing the pool of competitive partner networks shrinking. Jacques Bonifay, the chairman of the new MVNO Europe association, said that although the consolidation amongst mobile operators in Europe should have a positive effect on network efficiency and investments, these “must not be offset by harming access for MVNOs across Europe… Indeed, it is essential to ensure the continuous emergence of innovative services that MVNOs offer… MVNOs as small agile players, are the best trigger for telecoms innovation in Europe. By creating an association for the whole spectrum of MVNOs, we will strengthen our voice and adapt to the evolving market reality, while holding to our commitment towards the European institutions as a reliable partner.”