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Nov 12 - Business Times

MAXIS Communications Bhd and Technology Resources Industries Bhd (TRI) are seeking to adopt the status of a so-called "“mobile virtual network operator" (MVNO) to offer third generation (3G) cellular services.

“They are trying to determine if they could play a role in 3G's rollout without having to commit to an expansion of their networks,” an industry source said.

If the regulators are agreeable to the MVNO approach, the two companies will still be viewed by end-users as "real" operators, allowing them to compete on "a carrier-like footing" with 3G infrastructure-based networks.

The MVNO concept, while new in Malaysia, is a tried and tested practice in Europe, one that has been brought to the fore by Britain's Virgin Mobile.

In fact, Richard Branson's Virgin Group and Deutsche Telekom AG's One2One today operate the world's most successful MVNO.

Deutsche is a long-time strategic partner of TRI, owning 20.99 per cent of the latter.

Industry experts estimate that development of a 3G platform in Malaysia will cost each operator about US$1 billion (US$1 = RM3.80).

While industry forecasts say Maxis would rake in 40-50 per cent of its revenues from data transmission in the next couple of years, company officials were far more conservative, contending that Maxis was not even looking at a single-digit growth in the sector.

One reason the MVNO is favoured is that most telecommunication companies (telcos) believe there will be no quick switch by users to 3G technology.

While there are bound to be tie-ups and some degree of consolidation of network facilities, there will not be a rush into 3G anytime soon, they said.

"If the 3G licence issuance was announced a year ago, there would have been a mad rush by telcos. But following what happened in Europe, there is a lot of caution," an industry executive said.

He was referring to the muted response to the announcement last Monday by the Minister of Energy, Communications and Multimedia Datuk Leo Moggie that the Government intends to allocate 3G spectrum rights to three network facility providers.

In Europe, formerly cash-rich telcos like British Telecom had over-committed as a result of intense bidding for 3G licences.

"If anything, there will be a push for MVNOs"

MVNOs, unlike mobile network operators, do not have a licence to use radio spectrum, but has access to one or more of the radio elements of a mobile operator, allowing it to offer somewhat similar services to end-users.

Under the MVNO model, an operator pays a basic airtime charge to the network owner regardless of whether the communication is outward or inward bound. The MVNO gets to keep the revenue generated by calls over the “rented” component of the network.

This means not only can the MVNO charge customers for communications originated by it, like a normal mobile service provider, but it is also entitled to inter-operator revenues payable by interconnected carriers for termination of communications on the MVNO's "virtual network" , including for special services that it hosts.

The MVNO however must usually pay the host network for the air time on a "take or pay" basis, thus assuming all the risks involved.

Ericsson Malaysia's programme director for shared networks, Micael Martell, told Business Times that unlike ordinary carriage service providers, MVNOs are able to integrate their own value-added platforms into their retail offerings.

"The key challenge for the MVNO is brand-building to attract and keep customers... and likewise service support," he added.