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MVNO Operational Cost Planning: Modelling and Negotiation
Strategies for Contracting with Host Mobile Network Operators
Published on August 2009
Report Summary
Overview
A Mobile Virtual Network Operator (MVNO) typically leases spectrum and mobile network infrastructure from a Mobile Network
Operator (MNO), and then on sells these elements as telecommunication services at a profit markup and under a its own brand.
Historically MVNO service offerings have included traditional mobile voice and data, however more recently we have seen business
models evolve to include such strategies as business to business (B2B) MVNO's that target, for example, the machine to machine
(M2M), mobile banking, health and lifestyle industries.
A critical aspect to the success of any MVNO is its wholesale negotiations with the host mobile network operator (MNO). This report
provides valuable insights into the commercial models that are currently operational in today's MVNO market place. The report will
elaborate on the rate structures of the retail minus and cost plus models, the pros and cons of each, and how to implement them. The
report will discuss wholesale incentives, the reconciliation process and also what macro and micro environmental aspects to consider
when defining your negotiation strategy.
Target Audience
MVNO's start-ups: For senior level executives this report provides a detailed insight into the dynamics of the MVNO and operator
wholesale relationship. Examples of industry utilized wholesale rate models and recommendation on how to effectively establish your
negotiation strategy.
Network Operators: For any network operator employee involved in the decision making process or deployment of a potential MVNO
partner. This report provides detailed insights into the background of the MVNO model, risk factors to be aware of when evaluating a
potential MVNO partner and how to approach the negotiation process.
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Senior or Middle Management: For any mid to senior level management involved in the evaluation and decision making process for
either the hosting or launch of a potential MVNO, this report provides detailed insight into the technical, commercial and operational
frameworks required to successfully establish and maintain an MVNO HNO operation and wholesale relationship.
Consultants: This report provides detailed insights into the MVNO models technical options and constraints, what elements to
consider when defining your technology strategy, recommendations on forecasting, interconnection methodologies and example
wholesale billing methodologies with calculations to help you define and create your wholesale rate sheet.
Wholesale Billing Engineers: For engineers tasked with implementing wholesale billing platforms designed to invoice and reconcile
wholesale airtime. This report provides step by step guidelines on how to calculate wholesale rating structures, billing processes and
establish effective billing dispute processes.
Report Benefits
- MVNO technology options
- Wholesale Models - Cost Plus & Retail Minus
- Invoicing, reconciliation and the dispute process
- Recommendations for dealing with host MNO's
- Negotiation Tactics for MVNO's contracting with host MNO's
Table of Content
TABLE OF CONTENTS
1. Introduction. 5
1.1. The MVNO landscape. 5
1.2. MVNO Background 5
1.3. MVNO technology options 7
2. Wholesale models. 10
2.1. Cost Plus model 10
2.1.1. Cost Plus rate sheet. 12
2.2. Retail Minus model 15
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2.2.1. Straight retail minus. 16
2.2.2. Benchmark retail minus. 17
2.2.3. Retail Minus rate sheet. 19
2.3. Interconnect 20
2.4. Wholesale incentives 22
3. Invoicing and Reconciliation 24
3.1. Invoice dispute process. 25
3.1.1. Sample Invoice 27
4. Environmental considerations 29
4.1. Macro Environmental analysis. 29
4.2. Micro Environment analysis 30
5. Recommendations. 31
5.1.1. Knowledge & Expertise 31
5.1.2. Technology solution 31
5.1.3. HNO MVNO rate structure. 31
5.1.4. HNO Services list. 32
6. Negotiation tactics 33
6.1.1. Tell them what they want to hear. 33
6.1.2. Start high 33
6.1.3. Contract clauses. 34
7. Conclusions 35
7.1. Glossary of terms. 36
7.2. Appendix: Wholesale and Interconnect Settlement Calculation 37
Table of figures
Figure 1- MVNO technology options. 9
Figure 2 - Wholesale charges for network activity using the cost plus model12
Figure 3- Segments diagram 14
Figure 4- Wholesale charges for network activity using the retail minus model16
Figure 5 - Calculating the straight retail minus. 17
Figure 6 - Calculating the benchmark retail rate. 18
Figure 7- Calculation for wholesale rate. 19
Figure 8- Interconnect charging. 22
Figure 9 - Wholesale rate variance calculation with Interconnect consideration. 22
Figure 10 - Example HNO MVNO commercial relationship. 25
Figure 11- Sample wholesale invoice page 1. 28
Figure 12 - Sample wholesale invoice page 2. 29
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