Feasibility study to evaluate the potential entry of a new F-MVNO into the Spanish mobile market
Rights accessOpen Access
The mobile market until a decade ago had been composed mainly of Mobile Network Operators (MNOs). To promote greater competition in this market the European Commission (EC) has promoted various actions in the regulatory and policy environment in Europe. This has significantly facilitated the appearance of new players in this market, such as Mobile Virtual Network Operators (MVNOs), which in the case of the Spanish mobile market grew from 4 MNOs to 38 non-homogeneous operators by early 2017. This paper presents an assessment of the economic feasibility of the entry of a new Full-Mobile Virtual Network Operator (F-MVNO) in the Spanish mobile market. This operator does not own band rights and therefore has to negotiate with a host operator (HO) for use of spectrum and has to provide the suitable and necessary devices that route and switch calls. Moreover, it has to ensure the interoperability of its own services with other operators and has to manage the services and traffic generated by its own subscribers. The examples of evaluation analyzed in this work consider six different scenarios over five years. The evaluation for each scenario calculates the average return per user (ARPU) or the income per subscriber and the fixed and variable costs needed to provide the proposed services. The data used in this evaluation are provided by the National Commission for Markets and Competition, NCMC or “la Comisión Nacional de los Mercados y la Competencia, CNMC” in Spain , which is in charge of publishing quarterly the available data about the Spanish mobile market. The results show for each scenario the minimum number of subscribers that a new F-MVNO needs to ensure its economic feasibility (break-even point) and the time necessary to reach it. The methodology used in this work may also serve as a guide to assess the economic feasibility of new F-MVNOs entering in other European countries.
CitationTomas, J.; Melus, J. Feasibility study to evaluate the potential entry of a new F-MVNO into the Spanish mobile market. "Journal of Economics, Management and Trade", 2017, vol. 18, núm. 2, p. 1-23.