5 Forces Analysis Mobile Uk

Five Forces Analysis Mobile Telecom Industry (Europe / Tier 3)

1. Threat of new entrants

1.1 Capital Requirements. Depends on the type of business model adopted by the MVNO. There will be low costs for a basic MVNO, derived basically from channel development, CRM applications and billing management applications. Enhanced service MVNO may own some technical platforms so the cost of capital would be higher. In the case of Full MNVO the investment is the highest since this model deploys gateway MSC and Intelligent Network platforms. For MNO's the cost is much higher since they have to build the whole infrastructure.

1.2 Economies of Scale. General administrative costs, such as corporate overhead and billing bill decrease with increased production volume. In MVNO models the price depends also on volume and in the discounts that the mobile operator could offer for bulk-minutes based on volume. MNO's can get more advantages. Once the main network is in place, the costs of servicing each additional user are just a fraction of the to total costs with the growth of customer base.

1.3 Governmental and legal barriers. National regulators and the EU institutions realize the importance of competition in telecom industry and are in favor of the MVNO concept. The regulatory framework makes possible for the National Regulator Authorities to control the relations between MNO and potential entrants. Some regulators have required licensed operators to open for MVNO activity. The scarcity of frequency spectrum indicates that a potential MVNO has more chances to enter mobile network than a traditional operator.

In conclusion, MNO are less sensitive to the threat of new entrants due to the high cost of capital, the difficulty to get a license (most of the European countries already distributed the licenses), economies of scale and telecom brand recognition. Therefore, is much easier to enter the market via MVNO commercial agreement. Even thought the MVNO are...