Technology Analysis & Strategic Management Vol. 19, No. 2, 205 –225, March 2007
Entry and Innovation in Maturing Markets: Virtual Operators in Mobile Telecommunications FERDINAND JASPERS , WILLEM HULSINK & JULES THEEUWES† RSM Erasmus University, Wageningen University & Research, †University of Amsterdam, Faculty of Economics, and SEO Economic Research, The Netherlands
ABSTRACT In the last few years the mobile telecommunications industry has witnessed the entry of a large number of new service providers. Traditionally, mobile users get their mobile services from the service providers owned by vertically integrated mobile network operators (MNOs). The new entrants do not own a network of their own however, because they use the existing mobile infrastructure, i.e. they are ‘mobile virtual network operators’ (MVNOs). By granting these virtual operators access to their networks, MNOs actually facilitate the entry of potential competitors for their own downstream service providers. These new entrants might attract additional users by offering competitive services and create extra value with their well-known brand names and other complementary assets. This study focuses on the mobile market of the Netherlands, where competition is intense and MVNOs proliferate. The aim of this research is to improve our understanding of the entry of virtual operators in general, and specifically by explaining why and how virtual operators enter the mobile market and the impact they have on competition in the mobile market.
Introduction The mobile industry is a very dynamic and rapidly growing industry where an ever-increasing number of players offer an ever-expanding range of services and products. Less than 20 years young, this industry has already seen a number of waves of new entrants all developing different segments of the mobile market. In most countries the national telecommunications operator, often with one or two smaller contender(s), was the builder of the initial mobile infrastructure and the pioneer of the first and second generation of voice telephony. Gradually, the core of the industry was joined by new mobile network operators (MNOs), which were vertically integrated in both network operations and service provisioning. The roll-out of the new third generation UMTS technology may provide another way of larger and smaller new entrants and the launch of a myriad of novel concepts, formulas and services (e.g. mobile Internet).
Correspondence Address: Willem Hulsink, RSM Erasmus University, PO Box 1738, 3000 DR Rotterdam, The Netherlands. E-mail:
[email protected] 0953-7325 Print=1465-3990 Online/07=020205–21 # 2007 Taylor & Francis DOI: 10.1080=09537320601168144
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Despite the high levels of techno-industrial dynamics, in terms of innovation, new entry and competition, the life cycle of the mobile industry is reaching the saturation stage, with density figures of mobile phones overtaking those of fixed lines, and where most of the people in the Western world now have a cellular communications device. While the early generations of MNOs focus on a myriad of services and the mobile market is now entering its maturity phase, another market segmentation has taken place, namely between wholesale (business-to-business) services and retail (business-to-consumer) services, which allows so-called virtual network operators to enter the mobile market. These virtual network operators do not own a network of their own, because they use the existing mobile infrastructure to provide mobile services to end-users. Some examples of new entrants are Virgin Mobile in the UK, Disney in the US and Aldi in Germany. By granting these virtual operators access to their networks, MNOs actually facilitate the entry of potential competitors for their own downstream service providers. The new entrants might attract additional users, however, and create extra value with their well-known brand names and other complementary assets. In order to create a level playing field where innovativeness, new entry and competition flourish, an active role of the nation’s telecommunications regulator may be needed. Given its paradoxical nature, the aim of this research is to improve our understanding of the entry of virtual operators. First of all, we want to explain why and how virtual operators enter the mobile market. Exactly what are the motivations of operators and new entrants to cooperate? Are their interests aligned and how close do both partners cooperate? Second, we are also interested in the competitiveness of virtual operators. Do they really constitute a challenge to the incumbent operators, or does their dependence on the network supplier limit their competitive and innovative freedom? We aim to answer these questions in an exploratory case study of the Dutch mobile telecommunications industry. Compared with other European countries, the Netherlands has the largest number of GSM network operators (previously five and after 2005 reduced to four) and the largest number of virtual operators (37). In addition, the combined market share of these virtual operators is the largest in Europe (14%).1 Apart from the positions and strategies of network operators and (potential) new entrants we will also address how the industry regulator influences new entry. In addition, our study covers a 12-year period, which allows us to incorporate the dynamics of the mobile industry into the analysis. This paper is structured as follows. First, we discuss the methodology. This section also presents a detailed overview of the empirical setting. Second, we present the results from our analysis of the empirical data. Finally, we end this paper with a discussion and conclusions. Context In this paper we aim to improve our understanding on the entry of mobile virtual operators. In our analysis we study how and why the positions and strategies of the most relevant actors, i.e. telecom operators, (potential) new entrants and the industry regulator, evolved and how this explains the entry and competitiveness of virtual operators. In this study we conduct an in-depth, exploratory investigation of the Dutch mobile telecommunications industry.2 The period covered in our analysis runs from 1994—when the national incumbent KPN first introduced GSM—until 2005. In general, the Dutch mobile telecommunications industry is similar to other European mobile industries in many respects. First, a limited number of vertically integrated mobile
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network operators are the incumbent providers of mobile telecommunications services. In addition, the largest European operators Orange, Vodafone and T-Mobile have subsidiaries in the Netherlands. Second, based on the same European telecommunications directives, each national market has a regulator in place to stimulate effective competition. In addition, all national telecommunications regulators cooperate closely in the Independent Regulatory Group (IRG). Although there is room for different interpretations of the law and for adjustments to the specific characteristics of national markets, most regulators have a similar stance towards virtual operators. Third, most European markets witnessed similar dynamics in terms of market growth and technological change. Fourth, most countries have ten or more virtual operators (see Table 1). In the Netherlands we find the largest number of virtual operators however, making this market particularly relevant to study our research questions. Our analysis employs multiple sources of evidence. First of all, we interviewed several industry experts and representatives from, operators, (potential) new entrants and the industry regulator. Besides primary data we also used publicly available information, such as annual market reports published by the national telecommunications regulator, company press releases, and telecommunications websites and magazines. Insights resulting from our analysis of developments in the Dutch mobile telecommunications industry were published in several Dutch reports and outlets.3 Setting the Scene: The Dutch Mobile Telecommunications Industry Vertically integrated operators and market developments In the 1980s and the early 1990s, the incumbent telecom operator KPN was the only provider of mobile telephony in the Netherlands. In 1994, KPN introduced the digital GSM technology. In 1995, Libertel (which was later acquired by Vodafone) became the second mobile network operator. Like KPN, Vodafone obtained a license for free. In 1998 and 1999, when KPN and Vodafone already had over two million and one million customers respectively, three new entrants purchased part of the remaining frequencies for mobile Table 1. Number of virtual operators in EU countries Country Belgium Denmark Finland France Germany Ireland Italy Netherlands, The Norway Portugal Spain Sweden Switzerland United Kingdom
No. of virtual operators 29 14 10 13 32 3 0 37 12 3 3 23 5 24
Based on Takashimobile.com, website accessed on January 3 2006.
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telecommunications and entered the market with their own networks: Telfort, Dutchtone (currently Orange) and Ben (currently T-Mobile). Typically, these five infrastructurebased mobile network operators can be characterized by their highly integrated operations: they are very much focused on network coverage and control, capacity management and the provision of voice-based services. Their vertical integration strategy furthermore includes control over the distribution channels, sales and marketing (e.g. through direct sales forces, agents, retail shops), and operating their own billing systems and supporting technologies. After the entry of the three new networks the number of mobile subscribers grew enormously. This growth was the result of, among other things, the introduction of prepaid calling, better mobile phones and the marketing efforts of the network operators. To attract new customers and to increase the use of the mobile networks, rates were reduced and the purchase of mobile telephones was heavily subsidized. With more than sixteen million connections in 2005 the penetration rate of mobile telecommunications is slightly over 100%. In 2005 KPN and Vodafone had market shares of 38% and 28%. The market shares of the three late entrants are much lower: 17% for T-Mobile, and 9% for both Orange and Telfort. As a result of their large market shares KPN and Vodafone have considerable cost benefits. In addition, they benefit from their strong position in the business market where they have a collective market share well over 80%.4 The asymmetry between the early and late entrants is also revealed in the financial performance of the network operators (see Table 2). KPN and Vodafone have a much higher turnover and are very profitable, whereas the other network operators were not yet profitable as of 2002. In the mobile telecommunications sector many technological changes are taking place. The second generation GSM networks are not only used for voice services, but for data applications like mobile Internet (Wireless application protocol or WAP) and text messaging service (short messaging service or SMS) as well. Now the GSM market is saturated, the network operators have modified their GSM networks to facilitate General Packet Radio Service (GPRS) technology. This allows for a faster data transmission, making mobile Internet more user-friendly and allowing for new applications such as multimedia messaging services or MMS. The capacity for data transmission over mobile networks will further increase with the introduction of UMTS. Unlike GPRS, UMTS uses different frequencies from the ones used by GSM, which means that large investments will have to be made in the development of a new network. Table 2. Average quarterly turnover and Ebitda Average quarterly turnover (E million)
KPN Vodafone Telfort Orange T-Mobile
Average quarterly Ebitda (E million)
2001
2002
2001
2002
516 334 75 91 unknown
558 361 89 100 136
220 113 219 269 unknown
244 136 211 27 216
Based on financial publications by the parent companies. Ebitda refers to earnings before interests, taxes, depreciation and amortization.
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In the Netherlands the UMTS licenses were auctioned in 2000. The five available licenses were bought by the existing five GSM network operators, which meant that no new network operators entered the market (although a couple of new entrants were interested). Given the set-up of the auction (five licenses were auctioned in a market with five incumbents) it was no surprise that new entrants did not obtain a license.5 As a result of the investments in the licenses and new technologies, the financial resources the Dutch network operators have at their disposal is limited. In addition, there is strong pressure to achieve good financial results, as most Dutch networks are part of international companies that have spent large amounts of money to obtain networks and UMTS licenses internationally. At the end of 2005, only the two dominant operators KPN and Vodafone have introduced UMTS services. All in all, the market for new network technologies and services, such as GPRS, UMTS, MMS and mobile Internet services such as i-mode (KPN) and Vodafone live! are still very small relative to voice revenues and (person-toperson) text messaging.
Regulation and types of virtual operators Although competition among the Dutch mobile network operators is fierce, various examples indicate that mobile users may not be getting the best value for money. KPN, for instance, at least for a long time was able to maintain its prices above a competitive level.6 This has to do, among other things, with the limited clout on the demand side as well as a lack of transparency with regard to the rates being charged by the providers. The lack of transparency means that consumers find it hard to select offerings that suit them and that price-based competition is made harder. In addition, watchdogs (both at a national and at a European level) are suspicious about the rates for calling abroad as well as the compensation for transmitting calls from other networks (this makes calling a mobile number via a fixed line an expensive affair). Finally, the Dutch Competition Authority NMa has fined the network operators for anti-competitive arrangements and the exchange of sensitive information.7 In many industries the threat of new entry is a way to increase competition and to increase the benefits to customers. In mobile telecommunications, however, the number of mobile operators is limited because frequencies for mobile telecommunications constitute a scarce resource. Hence, at the network level the barriers to entry are considerable, since entry requires the acquisition of an existing operator. Furthermore, their control over a mobile network gives operators the authority to act as the sole service provider on their networks. Hence, the entry barrier at the retail level of service provisioning makes it necessary for potential service providers without a network of their own, i.e. virtual operators, to acquire access to the network of at least one mobile network operator. Obviously, one way to enter this wholesale market for mobile telecommunications services is to negotiate a commercial contract to obtain access to an operator’s network. An alternative entry strategy for new entrants is acquiring network access based on regulation. Like in all other EU countries the Netherlands has a telecommunications regulator that aims to establish effective competition for end-users in the telecommunications markets. National regulatory authorities are in charge of ensuring fair competition and equal infrastructural access. In case of inappropriate legislation or weak regulatory supervision and enforcement, facilities-based operators (as wholesalers and retailers) may have ways to marginalize MVNOs, for instance, through vertical price squeezes.
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The Dutch telecommunications watchdog Opta (Independent Post and Telecommunications Authority) can designate network operators as providers with significant market power (SMP) on the basis of their market share. On the basis of the former 1998 Telecommunications Act such providers were obliged to favour all reasonable requests for special access to their mobile networks. Although Opta states that no limitative indication can be given in advance as to what exactly constitutes special access, nor what reasonable conditions are, Opta does formulate some principles that make it possible to distinguish between different types of virtual operators (see Table 3).8 Virtual operators differ and are distinct from MNOs based on the extent that they control the resources required to operate in the mobile market, i.e. the depth of the market penetration.9 As described above, the vertically integrated Mobile Network Operators (MNOs) are in charge of both network management and service provision. Virtual operators in contrast do not own their own frequencies and mobile networks. We can distinguish between different types of virtual operators however, based on the extent that they are dependent on their network suppliers, i.e. control their own resources. At one extreme, service providers (SPs) are the most basic virtual operators. They purchase calling time from a network operator and sell that time to end-users under their own brand name. They provide billing and customer support, without engaging in any network activities however such as call routing. In sum, SPs are simply airtime resellers and completely reliant on the network operator for all network activities. At the other extreme, mobile virtual network operators (MVNOs) are the most extensive type of virtual operator. Rather than reselling calling time, MVNOs hire network capacity, and at least issue SIM-cards of their own (i.e. the smart cards inside mobile phones that identify and authenticate users) and maintain a home location register (HLR) containing data on their customers.10 All other network activities can be outsourced to the mobile network operator. Because MVNOs need access to the network elements of a network operator, this type of virtual operator, MVNOs are the only type of virtual operator that is included in the definition of special access.11 Hence, potential MVNOs first have to start their own commercial negotiations with the key SMP operators, with the option of appealing to Opta in case those negotiations prove unsuccessful. At a maximum, if an MVNO decides to carry out as many activities as it possibly can, it mainly uses the wireless connection between the end-user and the first point within the operator’s network where the MVNO can take over the traffic. This requires considerable investments in network elements, but it also means that the MVNO has a high level of freedom with regard to pricing, service development and routing. Since Service Providers (SPs) outsource almost all tasks to network operators, they operate on smaller margins. In
Table 3. Depth of market penetration for different mobile service providers MNO
MVNO
ESP
SP
Network Infrastructure/frequency management Routing ................................................................................................................................................................ Service provision Service development Resale of airtime
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addition, the only source of income SPs have comes from the calls their clients initiate, whereas MVNOs are also paid for terminating calls. In between these extreme types of SPs and MVNOs, we can distinguish Enhanced Service Providers (ESPs). In practice, because of their limited ability to differentiate and innovate, most SPs evolved into ESPs. Like SPs these virtual operators also trade calling time, but compared to SPs they have more room to innovate and differentiate their service offerings, for instance by displaying their brand names on the telephone screen and offering a voicemail service. Virtual operators in the Netherlands With the primary objective of stimulating demand in the introductory phase of GSM, KPN and Vodafone not only offered services to the end-user market themselves, but also used SPs to that end. At the end of the 1990s, nine of these wholesale customers were active in the Dutch market. These SPs depended heavily on the network operators. They hardly had any possibilities to develop new services themselves or to distinguish themselves in other ways. In addition, the margin between purchase rates and end-user prices was very small. After a wave of consolidation among SPs, Debitel is currently the only large SP. Debitel has more than one million customers and a 5% market share in the business segment.12 The smallest operator Telfort—burdened by a E2 billion debt—was the first other network operator to open up its infrastructure for virtual operators in 2001. The first new entrant via the Telfort network was Tele2. Tele2 is a large international telecommunications firm that, as far as the Dutch market is concerned, is predominantly active in the fixed telecommunications market for consumers. In other countries the company operates as a mobile network operator, which means that entering the market as an MVNO was relatively simple and cheap. In 2003 Telfort was sold for E25 million by the international mobile telecommunications company mmO2 to the investment firm Greenfield Capital Partners. Free of debt and independent of the international strategic interests of a larger telecommunications group, Telfort more aggressively pursued its wholesale strategy. Next to its own service provisioning division, it established an independent wholesale division with its own priorities and targets.13 Subsequently the number of virtual operators grew rapidly. By the end of 2005 the Netherlands had the largest number of virtual operators in Europe. Table 4 provides an overview of all 37 virtual operators. Telfort is the leading network provider, supplying 22 virtual operators. As a result of its wholesale strategy Telfort significantly increased its customer base. Currently, about one million of its 2.5 million subscribers are actually customers of its resellers.14 KPN is the second largest network supplier (in terms of the number of wholesale customers), offering services to 13 virtual operators. Some of these are owned by KPN itself though and quite a few mainly focus on international calls instead of domestic calls. Vodafone provides network services to only three providers. All three of them are SPs that started their operations right after Vodafone entered the market in 1995. After that Vodafone kept its network closed for new entrants. Finally, Orange only entered the wholesale market in 2004 and now facilitates three virtual operators, including cable company Wanadoo, which like Orange itself is also owned by France Telecom. T-Mobile remains the only network operator in The Netherlands without any virtual operators on its network. Among the new entrants are several retail chains and telecommunications and cable companies. Most of the new entrants act as ESPs offering prepaid services. With a total
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Virtual operator
Type of virtual operator
ACN AH Mobiel Allo Amatus Baron Aspider Mobile Call4Care Comfour Telecom Countdown Mobiel Debitel Dekatel easyMobile Galaxy Business Networks GSMpartner HEMA Prepaid Bellen Intercity Mobile Communications Lebara Mobile lowcall.nl
ESP/MVNO ESP Prepaid ESP ESP ESP Postpaid ESP ESP ESP Prepaid ESP ESP SP Prepaid ESP SP SP Prepaid ESP Early SP
Telfort Telfort 145,000– 150,000 KPN Telfort KPN Telfort Telfort Telfort Telfort Telfort/KPN/Vodafone 1,300,000 KPN 20,000 Telfort KPN 15,000– 16,000 KPN KPN KPN/Vodafone
Prepaid ESP Prepaid ESP owned by Debitel ESP
Telfort Telfort
Prepaid ESP Prepaid ESP ESP
KPN Telfort Telfort
ESP SP Postpaid MVNO Prepaid ESP owned by KPN MVNO/ESP owned by KPN MVNO ESP ESP ESP ESP focusing Prepaid ESP MVNO/ESP Postpaid ESP ESP ESP
Telfort KPN/Vodafone Orange KPN
M2M/Stream Communications Ortel Mobiel PePtalk Primus Telecom/Affinity Telecom Qick RAM Mobile Data Scarlet Telecom SIMYO Sympac Tele2 Mobiel Telefoon Totaal Tommy Telecom Transatel TrendCall UPC Mobile Versatel Mobile Wanadoo Mobile Yes Telecom Yiggers Carefree Mobile
Network provider(s)
No. of users
Telfort
KPN Telfort Telfort Telfort Telfort Telfort Orange Telfort Orange KPN Telfort
534,000
Based on Takashimobile.com, website accessed 3 January 2006 (only currently active VOs are included). Added by the authors.
of more than two million subscribers, the collective market share of these virtual operators in the retail market is 14%. Two virtual operators dominate the wholesale market. Within this wholesale market Debitel—the ‘old’ SP on the KPN and Vodafone networks—is the largest virtual operator with a market share of 56% (1.3 million subscribers). Since 2002,
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Debitel also uses Telfort’s network as an ESP, and in the same year it also signed a more attractive (ESP) contract with KPN. Tele2 Mobiel comes in second place with a market share of 23%.15 Because of the relatively weak position of the three late entrants, the large investments in new technologies and the relatively large number of GSM networks (when compared with other European countries), there is continuous speculation that one or more of the network operators may withdraw from the Dutch market. However, the high level of sunk costs as a result of the investments in a network and the associated infrastructure present a considerable barrier to any operator contemplating such a move. As a consequence, network operators stay put as long as the expected cash flow is positive and the non-sunk costs can be retrieved. In 2005 the number of independent operators was reduced however, because Telfort was acquired for almost E1 billion by KPN. The competition authorities approved this acquisition, meaning that KPN now has a market share in excess of 50%. In addition, KPN now facilitates almost all virtual operators in The Netherlands. After the acquisition regulator Opta concluded that competition in the Dutch mobile market can be considered effective, meaning that KPN—despite the acquisition of Telfort—does not possess significant market power and therefore should not be subject to further regulations under the new 2004 Telecommunications Act.16 The Unfolding Play: Analysis of Strategies, Regulation and Outcomes We have described how the Dutch mobile telecommunications industry evolved into a mass market in slightly over 10 years. We have seen that a large number of virtual operators has entered the Dutch mobile market. We have also described the roles and characteristics of the three actors most relevant for the entry of virtual operators: the mobile network operators, virtual operators themselves and the industry regulator Opta. In this section we analyse how and why (potential) virtual operators did or did not enter the market, and how they influence competition in the mobile market. We specifically investigate the roles played by the three key actors involved and we also consider how technological and market developments have contributed to the current wholesale market for mobile telecommunications. Industry Regulator OPTA: Removing or Increasing Entry Barriers? Policy making by the Dutch regulator Opta is largely determined by EU guidelines that are incorporated in the national telecommunications act. Based on the 2004 Telecommunications Act Opta decided that competition in the mobile market was sufficiently effective, meaning that the dominant operator KPN no longer needs to comply with access regulation. Hence, potential new entrants can only enter the mobile market through a commercial deal with a mobile network operator. However, until the implementation of the 2004 Telecommunications Act the dominant operator KPN was subject to (special) access regulation based on the former 1998 Telecommunications Act. As explained above, only facilities-based new entrants (i.e. MVNOs) could appeal to this regulation. Based on this regulatory regime some attempts were made by potential new entrants to acquire access to the KPN network. However, this proved a lengthy route full of regulatory uncertainty. In 2001 for instance, the small mobile gaming
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company Yarosa started commercial negotiations with KPN to get special network access to become an SMS-based MVNO. After years of legal procedures and disputes the regulator finally forced KPN to open up its network. Ironically, this wholesale service never got implemented, because KPN no longer has significant market power under the 2004 Telecommunications Act. One reason for this high regulatory uncertainty is the difficulty for Opta to rule on the reasonability of a request by the potential entrant for special access.17 The reasonability mainly refers to the price tag attached to the special access service. Here, Opta is faced with the tricky task of finding a balance between the static and dynamic efficiency of the mobile market. In the short term (static efficiency) access regulation may encourage new entrants and price reductions, but in the long term (dynamic efficiency) access regulation may reduce operator’s incentives to invest in existing and new networks, i.e. operators obviously do not want third parties to benefit from their large and risky investments in mobile networks without a proper compensation. In addition, (potential) new entrants argue that the non-discrimination clause included in the regulation makes obtaining special access more difficult.18 This clause means that once KPN offers a special access service to a single new entrant, KPN is obliged to comply with all similar requests from other applicants on equal terms. This is likely to have resulted in KPN dragging its feet as illustrated in the request for special access by Yarosa. Because small entrepreneurs generally lack the time and the financial means necessary to pursue these lengthy and expensive regulatory opportunities, market entry directly supported by regulatory intervention has not occurred in the Netherlands. The Operator’s Point of View: Connecting Spongers or Lifesavers? Studying network access from the perspective of KPN, we come to understand why KPN was so hesitant to grant Yarosa access based on regulation. SMS text messaging is a very successful mobile application. Nearly all non-voice revenues are generated by SMS. Tariffs per message range from several cents to well over 20 cents, while the costs per message are much lower. Hence, Yarosa’s proposed MVNO business model threatened to undermine these lucrative margins. In other words, by granting network access to Yarosa KPN would facilitate a new competitor in the market place. In general, by allowing virtual operators on their networks, network operators actually facilitate and supply potential competitors, because both the facilities-based and virtual operators look to attract first-time mobile users as well as each other’s existing mobile users. Two important characteristics reduce the competitive effect of MVNOs to operators, which help explain why several operators engaged in commercial contracts with virtual operators. First of all, Telfort showed the value of virtual operators as wholesale customers. Because of financial problems and spare network capacity, Telfort’s opened up its network to virtual operators. These new entrants buy network capacity and attract their own mobile users, thus increasing Telfort’s revenues and the efficiency of its operations. Similarly, the decision of Orange to allow several new entrants was driven by its need to better utilize its network. Obviously, network operators want to ward off new entrants who are considered more as spongers than as lifesavers.19 Hence, the benefit of virtual operators as wholesale customers is most significant for operators with
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small market shares and large debts, such as Telfort and Orange in the Netherlands. These operators typically have plenty of spare network capacity and run a limited risk of cannibalizing their own customer base, which would entail losing the margin between retail prices and wholesale prices.20 While the benefit of virtual operators as additional customers is limited to powerful operators, how can we explain commercial entry through the network of the largest network operator KPN? A second advantage of virtual operators, differentiation, might explain this. Especially in saturated mass markets, such as the current mobile telecommunications market, there is a high need for differentiated service offerings and targeted market segmentation. Whereas operators target the mass market with their own brand names, virtual operators can add value by identifying and targeting the specific needs of distinct groups of users. If we look at Telfort’s portfolio of virtual operators for instance, we see companies as diverse as retail chains, providers of fixed telecommunications services, charity organizations, and ESPs focused on users who frequently make international calls. KPN also facilitates quite a few new entrants that focus on specific market segments. However, KPN owns several of them and also uses different brand names of its own (e.g. the brand name Hi to target youngsters). In addition, the independent virtual operators on the KPN network either focus on international callers or on the national prepaid market. KPN itself emphasizes the more lucrative post-paid market. In other words, differentiation advantages seem to be present, but KPN is also capable of targeting specific market niches on its own. So, what other factors can explain why KPN provides network access to several new entrants? One potential explanation might be that KPN wanted to prevent a potential new entrant from getting access through a competing network provider. The retail chains HEMA and Albert Heijn for instance each have a large reach among consumers and both entered the mobile market using the KPN network. In addition, both entered the market while KPN was subject to additional regulation under the 1998 Telecommunications Act. With legal procedures and regulator inquiries under way, KPN might have hoped to prevent disadvantageous regulatory actions by granting several ESPs network access on commercial terms. In other words, while regulation did not result in the entrance of MVNOs despite legal opportunities, the threat of regulation might have resulted in the entry of several ESPs. The Norwegian network operator Telenor for instance provided access to start-up company Sense, one of the first virtual operators in Europe, because Telenor was afraid that the watchdog would issue a license to a new network operator.21 While Vodafone still provides network services to some early SPs and Orange just recently entered the wholesale market, the supply side of the wholesale market mainly consists of the KPN and Telfort networks. Remarkably, KPN acquired Telfort in 2005 for almost E1 billion, while Telfort was bought in 2003 for only E25 million. Clearly, Telfort is of complementary value to KPN. Telfort has many prepaid customers, whereas KPN focuses on post-paid mobile users. The success of Telfort’s aggressive wholesale strategy in 2003 – 2005 is the most obvious explanation for this huge increase in Telfort’s market value. Apparently, KPN was very much inclined to acquire this rapidly growing successful (wholesale) operator, for instance announcing quickly the merger of the wholesale operations of the two firms. This means that KPN now has full control over Telfort’s wholesale strategy, which could prove a threat to the future wholesale market.22 KPN might be less inclined to give virtual operators as much freedom and margins as Telfort did. This could affect the contract renewal for existing virtual operators as well as the entry opportunities for new entrants.
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In sum, from the perspective of network operators we can conclude that new entrants have characteristics of both competitors and customers. As shown by the success of Telfort, virtual operators are especially beneficial as wholesale customers for small, debt-laden network operators. In contrast, for large and dominant operators new entrants mostly pose a competitive threat. Hence, they have a clear incentive to keep their networks closed. However, allowing new entrants access on commercial terms might prevent additional disadvantageous regulation as well as the entry of virtual operators through other networks. In addition, virtual operators offer differentiation advantages, but as the case of KPN shows, large operators can also pursue these advantages on their own. Virtual Operators: Targeting Market Niches or the Mass Market? Unlike MNOs who are burdened by high costs associated with license fees and infrastructures, the service-based new entrants simply buy network capacity from existing operators and many of them only control some critical technologies and servicing and billing platforms, thus avoiding the need to build their own networks, buy licenses and hire large staffs. In addition, many of the new entrants use the Internet as their sole distribution and customer service channel, meaning they do not need to set up shops in city centres. This virtual approach allows new entrants to deliver mobile services at lower rates. However, despite these obvious cost advantages of virtual operators, their margins are largely determined by the contracts they negotiate with a mobile network operator to make use of its network. The early SPs on the KPN and Vodafone networks for instance found it very hard to operate profitably.23 The importance of scale in purchasing calling time and the entry of the three new networks resulted in a major consolidation wave among SPs.24 Only Debitel managed to survive as a substantial SP after acquiring several other SPs. Besides by increasing its scale through the acquisitions of other SPs, Debitel managed to increase its margins by evolving into an ESP, which allows Debitel to differentiate its service offerings and to offer more value-added services. An alternative strategy to increase the margin between wholesale and retail tariffs is followed by Tele2, i.e. to employ an MVNO business model. MVNOs are far more likely to compete with network operators than SPs, as they carry out more of the network activities themselves, i.e. they outsource less network activities to the operators. The MVNO strategy implies that the new entrant has to already own or has to invest substantially in several network facilities (e.g. switches and several network databases). Therefore it is no surprise that only Tele2 operates as an MVNO in the Netherlands, since Tele2 is also a mobile network operator in several other European countries. As a result, Tele2 already possesses the assets and knowledge required to operate as an MVNO, and in addition Tele2 is able to manage its Dutch MVNO operations using its systems abroad. As the failed attempt by Yarosa to access KPN’s network shows, we can also explain the absence of MVNOs because of the competitive threat they pose to operators. MVNOs make only minimal use of the networks they use, which reduces the compensation for the network hosts and gives the MVNOs themselves greater competitive freedom. In contrast to ESPs for instance, MVNOs also receive a compensation for terminating calls. From the dominance of the ESP business model we can conclude that ESPs form a good compromise between the conflicting interests of operators and new entrants. In sum, this can be explained by the difficulty to turn SPs into a profitable business and by the unattractiveness of MVNOs to both operators and new entrants. As an exception, the entry of Tele2 as an
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MVNO can be explained by Tele2 being a mobile network operator in other European countries and by Telfort’s high need to increase its revenues (note that Tele2 was Telfort’s first virtual operator in 2001 when it was still burdened by huge debts). Regarding the organizational form of the virtual operators, we currently observe only buyer – supplier relationships between virtual operators and their network providers. This is in stark contrast with the traditional approach of vertical integration that gives the operators full control over both network operations and service provisioning. The literature on transaction costs economics and the resource-based view of the firm discusses ownership as a control mechanism to ensure appropriation of the returns on innovation.25 In theory, hybrid organizational forms, i.e. alliances or joint ventures where the operator owns part of the virtual operator, provide a suitable organizational solution to reduce appropriation concerns while enjoying the commercial benefits of virtual operators.26 Apparently, the operators’ control over the upstream bottleneck facility guarantees them a sufficiently powerful position that hierarchical control through legal ownership is not needed to ensure cooperation and coordination.27 Hence, the goal to obtain a sufficient return on their risky investments in licenses and network infrastructure, arguably the most important challenge for operators, is not at risk with the current ESP deals. The only example in the world of a joint venture between a new entrant and its network supplier is Virgin Mobile. Virgin Mobile operates in the USA (on the Sprint network), in Australia (Optus), in Canada (Bell Mobility), and in the UK (T-Mobile). Virgin Mobile illustrates that the relationship between entrant and network operator can move beyond the buyer–supplier stage. Virgin Mobile UK was founded in 1999 as a fifty–fifty joint venture between the Virgin Group and the mobile network operator T-Mobile. Under this arrangement T-Mobile was the network supplier for Virgin Mobile, and the joint venture itself was able to issue its own SIM cards. In addition, Virgin Mobile was responsible for setting its own tariffs, billing and customer service infrastructure, and for the full cost of acquiring customers. This organizational arrangement means that the network provider not just acts as a supplier and a competitor, but also as a shareholder with a commercial interest in the new entrant.28 For new entrants it is extremely important to maintain a good relationship with the network supplier on which they are fully dependent, because the specific investments made by entrants, for instance in terms of their sales efforts and equipment, require contractual protection from the network supplier’s market power.29 Virgin Mobile UK is also the most successful virtual operator in the world. In 2005 Virgin Mobile UK had a customer base in excess of four million customers. Key to this success is the combination of cheap and simple subscriptions and valuable complementary assets. Not only does Virgin Mobile benefit from the strong brand name of the Virgin Group, its activities in the areas of store chains, entertainment, financial services and Internet are also relevant complementary assets. In the Netherlands, retail chains such as Hema and Albert Heijn adopt a similar approach to leverage their well-known brand names and other complementary assets (e.g. distribution channels) and target their own loyal customer bases, typically with prepaid services. Another group of new entrants has a background in related ICT markets (e.g. fixed telecom operators and ISPs). Companies such as Tele2 and UPC target the mass market and aim to add value by bundling different telecom offerings, i.e. fixed-line telecommunications, internet services and mobile telecommunications. In contrast, the added value of companies without valuable complementary assets, such as small firms or start-ups, is not evident to operators. Hence, they pose more of a competitive threat and generally find it more difficult to negotiate network access.
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Based on the above discussion, it has become clear that virtual operators also differ in terms of the breadth of a market domain addressed (i.e. broad or narrow targets) next to the depth of the market penetrated discussed earlier (e.g. MVNOs vs ESPs).30 By combining both dimensions of organizational strategy we can distinguish between different strategies of the actors in the mobile industry (see Table 5). MNOs by definition pursue the most aggressive strategies, controlling their own networks and licenses. Market leaders such KPN and Vodafone however adopt more general strategies (e.g. targeting both business and consumers) than for instance Telfort, with its primary focus on the consumer market. Typically, virtual operators control fewer resources and therefore operate more conservatively. As indicated in Table 3 however, we can also distinguish between the depth of different types of virtual operators, for instance with MVNOs controlling more resources than ESPs. Also in terms of market breadth, we observe different types of virtual operators, i.e. virtual operators focusing on the mass market (e.g. Tele2) and on market niches with simple, prepaid services (e.g. Albert Heijn). The Competitive Impact of Virtual Operators Despite their large number, the impact of virtual operators on competition in the mobile retail market is limited. Debitel has a considerable customer base, but it only recently managed to transform itself from a SP into an enhanced SP. The remaining new entrants have only been active for a limited time and to date they have a limited but growing number of customers. Some providers use innovative pricing structures, but it could be argued that they succeed in further messing up the mobile market rather than offering greater transparency. Thus far there has been no positive effect on the high delivery rates for calls to mobile networks. In the negotiations the network operators probably do not allow entrants to compete on call rates. In addition, the entrants themselves have an interest in maintaining the level of these rates once they have entered the mobile Table 5. Organizational strategy in mobile telecommunications Market breadth General
Aggressive
Market penetration
Special
Firms exploit as many Firms exploit as many resources as possible as resources as possible and fast as possible within a as fast as possible over a narrow band of market broad spectrum of market opportunities opportunities Mobile Network Operators, Mobile Network Operators, such as Vodafone and KPN such as Telfort
Firms adopt a conservative approach to exploiting resources over a broad spectrum of market opportunities Conservative Virtual Operators (with MVNOs less conservative than ESPs), such as Tele2
Firms adopt a conservative approach to exploiting resources within a narrow band of market opportunities Virtual Operators (with MVNOs less conservative than ESPs), such as Hema and Albert Heijn
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market. In addition, innovative entrepreneurs like Yarosa failed to enter the market as an MVNO. Almost all new entrants enter the market as ESPs, which limits their competitive impact as they are firmly controlled by their network hosts. However, in the second half of 2005 several new service providers entered the market each claiming to offer the lowest tariffs for prepaid services. KPN introduced its own a low-cost brand name Simyo, while also easyMobile entered the Dutch market. In addition, Debitel established its own low-cost brand lowcall.nl and also Tele2 lowered its tariffs. This ‘price war’ resulted in lower tariffs for consumers. Table 6 provides an overview of the prepaid tariffs in January 2006. From this table we can derive that the offerings of ESPs are far more competitive than the prepaid offerings of operators. The price per text message charged by most operators is almost four times higher than the price at the cheapest ESP (easyMobile), and the price per minute is more than twice as high as the price per minute charged by the cheapest virtual operators. Hence, we can conclude that the new entrants mainly enter the market as ESPs through the KPN/Telfort network. The majority of them focus on the prepaid market segment, where they have considerably reduced the prices. It must be noted however that the prepaid market is shrinking because the operators are competing (e.g. by subsidizing mobile handsets) to increase their number of post-paid users. Post-paid users are more attractive to mobile operators because in general they sign contracts for at least one year and generate more revenues. Finally, a future concern for the competitiveness and entry barriers of new entrants is KPN’s acquisition of Telfort. Without any additional regulations, KPN is allowed to discriminate between requests for network access, i.e. for the same wholesale service KPN can in principle offer start-ups a less attractive deal than a large, established brand name with a strong position in a specific market segment. Furthermore, the case of Albert Heijn has shown that KPN charges its wholesale clients higher tariffs than the
Table 6. Tariffs for prepaid services Type of provider
Provider
Lowcall.nl (owned by Debitel) Debitel Tele2 easyMobile AH Mobiel UPC Hema Simyo (owned by KPN) Hi (owned by KPN) Vodafone KPN T-Mobile Orange
Network supplier(s)
Call setup
Price per minute
SMS
ESP
Telfort/KPN/Vodafone
0
14
7
ESP MVNO ESP ESP ESP ESP MNO
Telfort/KPN/Vodafone Telfort Telfort Telfort Orange KPN N/A
35 14 15 35 18 35 15
7 7 6 10 9 10 8
MNO MNO MNO MNO MNO
N/A N/A N/A N/A N/A
35 35 35 35 35
9 9 23 23 23
Based on an overview at www.tele2.nl, accessed 9 January 2006. Added by authors.
Unknown 6 7 7 10 7 7 7 9 7 7 7
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independent Telfort. Albert Heijn—the largest Dutch chain of grocery stores—switched its ESP operations from KPN to Telfort, because KPN charged too high prices. Ironically, after the acquisition of Telfort Albert Heijn is now again supplied by KPN. The Underlying Logics: Market and Technology Dynamics Market dynamics At the industry level both technological and market developments contributed to the entry of virtual operators in the Dutch mobile market. In the strategic management and industrial organization literature, light has been shed on the evolution of industries and the various developmental stages through which a sector comes into being (its emergence) and subsequently reaches maturity, followed by devolution (its decline).31 In growth industries, characterized by an increasing number of new entrants and an expansion of demand, firms seek to profit from technical innovations and new products and build up complementary assets (superior marketing know-how, sales skills and distribution systems) in order to obtain a sustainable competitive advantage. In maturing industries companies, large companies, now facing declining profits and a saturation of demand, try to jointly stabilize competition by preventing entry and cut-throat competition, supported by controlling (excess) capacity and cutting costs. In order to protect their market share, the incumbents not only improve their product quality and service provision and for that purpose seek ownership of supply and/or distribution operations, but they also promote non-price competition through price signalling, price leadership and product proliferation strategies. Notwithstanding their search for control in the final stages of their sector’s evolution, incumbents in some industries still face new entry by ‘lean and mean’ and ‘no frills’ operators. The mobile telecommunications industry has witnessed a similar pattern as described above. Before the introduction of GSM in the mid 1990s, mobile telecommunications was based on analogue technologies and the number of users was limited. The introduction of GSM technology and technological improvements in handsets (e.g. smaller handset and increased battery lifetime) soon attracted a large number of mobile users. Before Orange, Telfort and T-mobile entered the market with their networks in 1998 and 1999, the early movers KPN and Vodafone had several years to develop a first-mover advantage (e.g. by solving technological problems, learning about customer preferences, establishing a loyal customer base and developing a brand name). In these early years (i.e. roughly the 1994 – 1998 period), KPN and Vodafone of course offered mobile services in the end-user market themselves, but they also allowed a number of SPs on their networks to attract as much first-time users as possible. After the entry of the three additional network operators, the increasing quality of handsets and the decreasing prices as a result of scale economies and competition among the network operators (e.g. the introduction of prepaid calling and heavy handset subsidies) caused the mobile market to grow rapidly, shifting from business users to consumers as new users. During these years of rapid growth (i.e. roughly the 1999 –2002 period) the importance of SPs to KPN and Vodafone was limited, because it was easy for the network operators to attract new users themselves. Hence, during that time no new SPs entered the market using the KPN or Vodafone networks. While the GSM customer base was growing very fast, the year 2000 proved a turning point for the mobile industry. As in many other European countries, the incumbent operators invested large sums of money to acquire UMTS licences. As all Dutch operators
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were part of firms that invested in UMTS licences across Europe, there was a huge pressure to reduce debt. As a result O2 withdrew from the Dutch market, which left its subsidiary Telfort without debt and international interests. Hence, Telfort reduced its efforts to build a UMTS network and turned to virtual operators to attract users and increase its revenues. From 2003 onwards, when the market became more and more saturated, the number of new entrants increased rapidly, especially through the Telfort network, but also KPN and Orange added several wholesale customers. In the current mass market, operators may not know their customers well enough to fill the (latent) demand for cheaper and/or additional innovative services, offering flexible pricing formulas, making package deals with other branded (i.e. non-telecommunications) products and services, target-group promotions, etc. Servicebased operators may create or exploit their affinity with the customer and introduce quickly all kinds of innovations and/or price discounts. In addition, the costs of attracting and retaining customers are considerable in saturated markets, meaning there is a need for differentiation and segmentation. Under these circumstances the generic network operators seem to be welcoming new entrants with financial and complementary resources (e.g. customer bases in other industries, existing distribution channels and brand names, and complementary assets to develop value-added services, e.g. content that niche users prefer). In sum, the development of the mobile market into a mass market constitutes an important driver for the entry of SPs in the early phase of the GSM market, their subsequent consolidation in the growth phase, and the entry of ESPs and MVNOs in the current mature phase. Besides a group of ESPs that focus on international calls, most ESPs target the prepaid market segment with simple and cheap service propositions. In contrast, most operators target the post-paid market segment with complex tariff plans and new services and applications based on the latest technological innovations (e.g. UMTS, GPRS, i-mode (KPN), MMS). Despite these new technologies, voice services are responsible for about 80% of mobile revenues. In addition, text messaging is responsible for most of the remaining mobile revenues, with simple person-to-person texting as the most popular application. Hence, we might conclude that the operators ‘overshoot’ the needs of most mobile users, creating space at the lower-end of the market for virtual operators to offer ‘disruptive innovations’, i.e. cheaper and simpler reconfigurations of existing offerings that usually constitute more of a marketing than a technological challenge.32 Although these architectural innovations favour new entrants over incumbents in many traditional markets, the operators’ ownership over the essential mobile network facilities ensures the operators a strong position vis-a`-vis virtual operators.33 Technology dynamics Technological developments also contributed to the entry of virtual operators. In the mid 1990s GSM was still an immature network technology. Although the technology itself was highly standardized by European standardization bodies, the networks and technological systems themselves were very new to both network operators and hardware manufacturers, such as Ericsson and Nokia. Hence, both parties needed time to learn how the networks would operate in practice and what problems would occur. The high level of technological uncertainty confronted by the first-movers KPN and Vodafone is one reason why they initially only allowed SPs to resell their airtime. This wholesale arrangement has no implications for network management at all and ensures that all interdependencies and technological problems can be coordinated and resolved within the operator internally.
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Over time, experience with mobile networks resulted in incremental component improvements and in increasingly standardized interfaces between the various subsystems of the mobile telecommunications product system (e.g. switches, databases, service platforms, handsets). This trend facilitates the unbundling of the mobile value chain and therefore allows more extensive forms of mobile network access, such as enhanced SPs and even MVNOs.34 From an information-processing point of view, it is more efficient to create and run these more complex virtual operators in less uncertain environments, because of the decreased need to resolve interdependencies and to coordinate tasks.35 In addition to these coordination benefits, standardized interfaces also reduce the specificity of the investments that new entrants need to make in order to interconnect their service activities to a network supplier. Assuming bounded rationality and uncertainty concerning the opportunistic behaviour of network suppliers, less specificity makes potential entrants more willing to engage in more extensive forms of network access.36 MVNOs for instance can in principle move their entire operations from one network supplier to another, because they issue their own SIM cards with their own mobile network code. This observed trend is also in line with theorizing on the technology life cycle and on product modularity. Initially radical innovations create a new market or technological subfield.37 During this stage the level of technological uncertainty is high, also meaning that the interdependencies between the components of the system are largely unpredictable. Over time incremental innovations improve and reinforce the technological trajectory and the level of technological uncertainty and the interdependence between components are reduced.38 The standardization of interfaces facilitates the specialization of labour within a system without the need for intense information exchange between subsystems.39 Concerning the future market for next generation of mobile services the picture is not yet clear. On the one hand, third generation operators may want to keep the key development activities in-house to capture the rewards from heavy investments in conducting R&D, obtaining licenses and marketing. On the other hand, they may have a lot of spare capacity that they may want to resell to existing and possibly new MVNOs. In addition, it remains to be seen how new technologies, such as voice over IP, will impact the mobile telecommunications industry. In sum, the saturation of the market for mobile telecommunications, combined with technological standardization and modularization are important industry-level drivers for the entry of virtual operators. In addition, the financial problems resulting from the auction of UMTS spectrum might spur the opening up of the wholesale market. Discussion and Conclusions In this paper our aim was to improve our understanding on the entry of virtual operators in the mobile telecommunications industry. To explain why and how virtual operators enter the market and to investigate their competitiveness, we performed an in-depth study of the Dutch mobile telecommunications industry over a 12-year period (1994 –2005). We found different patterns and types of entry during our period of analysis, which can be explained by a combination of industry-level factors and the interplay of the strategies of operators, potential entrants, and the industry regulator. At the industry level, more extensive new entrants (i.e. ESPs instead of SPs) became possible as the network technologies standardized over time and became more modular. In addition, both the introductory and the mature phases of the product life cycle seem to favour virtual entrants, whereas entry in
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the growth phase of mobile telecommunications did not occur. This pattern is tightly coupled to the strategies of the mobile network operators, who—in the absence of regulation—control access to their mobile networks and therefore determine whether potential entrants are allowed to enter the mobile market. Because of their control over essential network facilities, operators can prevent the entry of highly competitive MVNOs and entrepreneurs. At the same time, operators are free to positively discriminate potential entrants with established brand names, customer bases and valuable complementary assets. Operators might even pre-empt competing networks by granting such firms network access. In practice, most operators facilitate at least a small number of ESPs. ESPs are more attractive to operators than MVNOs, because the latter appropriate a larger share of the margins on originating as well as terminating tariffs. In addition, ESPs pose less of a competitive threat to operators because they are particularly suited to target segments within the prepaid market. In these segments ESPs even caused significantly lower prices for end-users. Illustrating the market power of the operators however, we find only buyer –supplier relationships between the operators and ESPs. Apparently operators can afford to engage in relationships with ESPs without the ownership to control the actions of ESPs and to align interests. Overall, the new entrants have small customer bases and a limited impact on competition in the end-user market. Obviously, a single case study design has its limitations. An in-depth analysis of one national market over a long period of time was necessary, however, to achieve our research aim, which is primarily concerned with establishing internal validity. To compensate for the trade-off between internal and external validity, we can claim that the Netherlands is similar to most other EU countries in many respects, e.g. market dynamics, market structure, regulatory regime, and the entry of virtual operators. From Table 1 we learn that Italy is the only country without virtual operators. Despite several complaints by potential new entrants, Italy’s regulator concluded in 2005 that none of the three network operators was in possession of significant market power. Hence, as in the Netherlands, there is no MVNO access regulation in Italy that can force the operators to open up their networks. In contrast to other European markets, where at least one operator acts as a wholesale supplier, all Italian operators prefer to keep their networks closed. A future in-depth study of the Italian market is required to come to a more detailed understanding of this outlier. Another avenue for future research might be the attempt to replicate our findings in the (future) market for UMTS. It would be interesting to study whether the same patterns of entry can be observed in the market for this only recently commercialized technology. For business scholars this paper provides several interesting insights. First of all, this paper studies market entry in a special context, i.e. a context in which the potential new entrants are completely dependent on the supply of an upstream asset, which is controlled by competitors in the downstream market they wish to enter. This is entirely different from entry in other contexts, such as industries with clear access regulation (i.e. fixed telecommunications) and more traditional markets where the entry decision is confined to a single stage of the value system. Second, the richness of our in-depth case study design illustrates the complexity of market entry in this particular empirical setting. The entry of mobile virtual network operators takes place in a complex interplay of stakeholder strategies and industry dynamics. Entry becomes more likely as the interests of operators and new entrants correspond, which is influenced by the market position of the operator, the business model aimed by the new entrant, and the regulatory regime, as well as by the maturity of the mobile market and the technologies used.
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Finally, for regulators and managers alike the results indicate that the presence of an industry regulator might be an important driver for the entry of virtual operators. In the absence of MVNO access regulation, for which legal opportunities exist, especially dominant operators might feel the incentives to reduce the threat of unfavourable regulation by allowing ESPs on their networks, which are less competitive than MVNOs. Despite the rapidly increasing number of ESPs though, their impact on the mobile industry is very limited. Most new entrants have very small customer bases and most of them compete in very specific niches in the larger prepaid market. As a result, tariffs in the prepaid market have decreased, but the heavy handset subsidies offered by operators for postpaid contracts make it difficult for new entrants to attract users. In addition, the increasing number of service providers is likely to reduce the transparency of mobile telecommunications offerings even further. Hence, despite these new entries, it would be incorrect to assume that the entry barriers are low. In fact, without regulatory support the barriers to entry proved insurmountable for entrepreneurial start-ups who target more extensive business models than the current ESPs. Notes and References 1. Telecompaper (2005) Dutch MVNOs have 14 percent market share, www.telecompaper.com, 15 December 2005. 2. K. M. Eisenhardt, Building theories from case study research, Academy of Management Review, 14(4), 1989, pp. 532–550; R. K. Yin, Case Study Research. Design and Methods, 3rd edn (Thousand Oaks, CA: Sage, 2003). 3. F. Jaspers, W. Hulsink & J. Theeuwes, Reguleren? Reguleren!; Nieuwkomers zonder netwerk in de mobiele telecomsector (Regulate? Regulate! New entrants without a network in mobile communications), I&I: Nieuwe Media in Perspectief, 6, 2004, pp. 34–41; F. Jaspers & W. Hulsink, Op zoek naar relevantie in de mobiele markt (Searching for market relevance in the Dutch mobile telecoms market), Economisch Statistische Berichten, 90(4468), 2005, pp. 348–349; W. Hulsink & F. Jaspers, Na KPN nu NMA en OPTA aan zet (After KPN’s move to acquire Telfort, it is now up to the regulators), Het Financieele Dagblad, 19 July 2005, p. 5; SEO, Toegang tot mobiele netwerken; onderzoek in opdracht van OPTA (Access to mobile networks: research project for the Dutch regulator Opta), Amsterdam (Project for the Dutch regulator Opta, 2001). 4. Planet Multimedia, Debitel wint in zakelijk mobiel (Debitel wins in mobile business communications), www.planet.nl/multimedia, 5 February 2004. 5. M. C. W. Janssen, A. P. Ros & N. Van der Windt (Eds), De draad kwijt? Onderzoek naar de gang van zaken rond de Nederlandse UMTS-veiling (Wires crossed: research into the organisation of the Dutch UMTS auction), Erasmus University Rotterdam, Rotterdam (Project for the Dutch Parliament, 2001). 6. Opta, AMM evaluatie mobiele telefonie 2002 (Significant Market Power evaluation mobile telephony 2002). Den Haag, 2002. 7. NMa, NMa beboet operators mobiele telefonie voor EUR 88 miljoen (NMA fines operators mobile telephony for EUR 88 million), Press Release, 30 December 2002, Den Haag. 8. Opta, op. cit., Ref. 6; and Opta, Vormen van bijzondere toegang tot mobiele netwerken en redelijkheid van verzoeken hiertoe (Forms of special access to mobile networks and reasonableness of access requests), Den Haag, 2001. 9. E. Romanelli, New venture strategies in the minicomputer industry, California Management Review, 30(1), 1987, pp. 160 –175. 10. Oftel, Mobile virtual network operators: Oftel inquiry into what MVNOs could offer consumers, Oftel, 1999. 11. SEO, op. cit., Ref. 3. 12. Planet Multimedia, op. cit., Ref. 4. 13. Pyramid Research, MVNO hosting: Telfort shows the potential of wholesale business, Pyramid Research, 2005, www.pyramidresearch.com (accessed in January 2006). 14. Ibid.
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