1. A Simple Case of The Importance of
Risk Management for The Future of
Cellular Industry
Dev Yusmananda, Ssi, MBA
dyusmananda@tiscali.co.uk
devy@xl.co.id

2. Cellular Business Value Chain
TRADITIONAL
ONE OF POSSIBLE FUTURE MODEL

3. TRADITIONAL MODEL
TRADITIONAL
“Today, the industry still look at the cellular business in more
simple format, no differentiation between network provider and
service provider”

4. Cellular Business Value Chain
ONE OF POSSIBLE FUTURE MODEL
“The value chain of the business is segmented into two
main big sub flows, the Network Provider segment and the
Service Provider segment “

5. The Challenge of Cellular Industry
• Existing traditional market, the mass
market, is getting saturated
• The Mass market focus in low margin and
high volume
• There is no loyalty in mass market
• Mass market destroy the passion of being
innovative with new available technology

6. One of the strategy to face the
challenge - MVNO
• MVNO stands for Mobile Virtual Network
Operator
• MVNO means a cellular company without having
the network infrastructure (or based on the
above value chain diagram, MVNO is a service
provider only).
• The service provider buy the capacity (like the
voice minutes, number of sms) or technology
(like GPRS service, EDGE service or EvDO
service) from the network provider and build and
sell the services to end customer, based on the
“material” bought from network provider.

7. What is the benefit of MVNO
• the existing cellular company can have
many strategic business unit (the service
provider/MVNO) without the hassle to
have it inside the company
• The cellular company can minimize the
idle capacity without sacrificing the
revenue.
• The innovation of the new cellular
technology can be facilitated easier

8. What is the challenge of MVNO from
the Risk Management Point of View
• TRADITIONAL - When the network provider function and
the service provider function stay under one roof, under
same company, the need for effective methods tend not
properly maintained
• TRADITIONAL - There is no pressure to be detail in
managing the risk
• MVNO - develop a proper risk management plan
• MVNO - risk management plan for each operation
segment of the network operation
• MVNO - develop the integrity of each segment’s risk
management plan

9. The illustration
the network infra structure rely heavily on the BTSs (base transceiver Station)
for making the customers can get the signal.
After the customer get the signal, the network provider rely heavily on the
network backbone (either it is fiber optic or radio microwave), to ensure the
communication can be transport to the MSC (mobile switching).
Once the communication reach the MSC, the network provider depends on the
MSC to pass the communication to other customers as expected by the one
who make the call.
At the end of the call to ensure the customer still happy, the network providers
have to ensure the billing is run properly

10. Risk Reduction
• Another step the network provider needed to
implement are the plan for reducing the risk
• Service provider (The MVNO) will not satisfied
with only the availability of integrated risk
management plan, but they expect low level of
risk from the Network Provider
• The network provider has to implement risk
reduction plan
• All the risk reduction plan have to be integrated

11. Conclusion
• The traditional, if we may say, way of doing the cellular
business can tolerate inadequate risk management and
can tolerate inadequate high level of risk due to the
traditionally close relationship under one roof of the
network provider part and the service provider part
• But the MVNO concept can not tolerate that.
• In MVNO concept, service provider is different company
to the network provider. Network provider needs to meet
certain risk handling requirement before the service
provider can or willing to buy the network capacity from
the network provider.
• The risk management handling in network provider
becoming the strategic competitive tool in surviving
in the business.