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More MVNO Creates Opportunity for MVNE

The widespread interest in the mobile virtual network operator (MVNO) business has translated to more than $400m in recurring revenues for mobile virtual network enablers (MVNEs) in Western Europe and the US, according to the new Pyramid Research report. Pyramid expects MVNE recurring revenues to exceed $850m by 2010 in these markets and pre-launch investments will contribute a 20-30 percent upside to this total.

MVNEs have emerged from MVNOs' need to lower upfront and ongoing investments to operate their business; costs associated with setting up wireless operations, even for a virtual operator, are significant and few can justify the risks. Hence, the key driver of the MVNE model is the leveraging of assets across their customer base to lower costs.

Indeed, quite a few of the MVNEs covered in Pyramid's research have reputedly launched MVNOs at no cost. "Along with the MVNO model, the MVNE model is evolving from pure outsourcing to more of a venture capital model," says report author Guy Zibi. Over time, with more companies vying for the opportunity, the MVNE proposition has expanded from per usage based fees to a joint venture model in which MVNEs bring in their expertise in exchange for a stake.

One of the most fundamental questions facing MVNEs is whether their model is here to stay or just the brief symptom of the MVNO craze. Pyramid concludes that MVNEs with demonstrable expertise and unique platforms will stay, however those that are merely intermediaries are in a more vulnerable position. This is why MVNEs will increasingly look into building partnerships and move towards the venture capital model � they are less vulnerable to being dismissed at the end of the contract.

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