UK: Mobile Virtual Network Operators: Key issues

Last Updated: 3 March 2006

By Mike Conradi, Stephenson Harwood and Robin Bosworth, Schema

Mobile Virtual Network Operators, or MVNOs, are mobile operators who do not own a physical radio network infrastructure. They provide a service under their own brand using assets owned by another operator, and to the end-user the service appears indistinguishable from the "real thing".

Market Overview in Europe

Recent years have seen a rapid growth in the number of MVNOs across Europe. In particular the Scandinavian market has seen particularly aggressive competition. In Denmark service providers such as Telmore & CBB have gained over 40% of new shipments since launch in 2000. Even in the UK, where the mobile operators have often been reticent to encourage their emergence, MVNOs are now capturing 25% of pre-paid additions. In all these markets the introduction of MVNOs has brought more choice to the customer, more appealing mass market brands to the mobile market and lowered the cost of services.

However the MVNO market in Europe remains fragmented in nature and characterised by a series of ad-hoc, bi-lateral relationships between Mobile Network Operators (MNO) and service providers. Network operators have been wary about the impact of MVNOs in cannibalising their existing revenue streams, and so agreements have tended to focus on those market segments where the operators feel that the brand and distribution channels of the service provider are complementary to their own. This has been typically true at the low end, pre-paid segment of the market. The MNOs have been resistant to offering wholesale deals that would enable a service provider to address the more profitable post-paid base.

In many countries the regulators have accepted this situation, taking the view that there is sufficient competition between the network operators to avoid the need for intervention. However in a small number of countries (eg Ireland), the regulator is beginning to question whether there is a need for intervention to oblige MNOs to offer access to MVNOs.

Any new service providers seeking to enter this space face both practical and legal issues.

Practical issues

  • The timescales involved in negotiating bespoke agreements with the mobile network operators are often lengthy (often 6-12 months) and complex;
  • Average Revenue Per User: Typically MVNO deals are focused at the low spending, price sensitive segment of the market where margins are tight. As explained above, this is often the result of a deliberate policy by MNOs to offer access at rates designed to ensure that MVNOs are only truly viable in low spending segments.
  • Only pre-paid will be available: Most operators are reluctant to offer a post-paid deal, not simply because they wish to protect this attractive segment of their customer base, but also because their systems and processes are simply unable to support offering this functionality to their MVNO customer.
  • Subscriber Acquisition Costs (SACs): Given the typical target segment for an MVNO, SACs represent a significant proportion of revenues. A challenge for all MVNOs is to reduce SACs through innovative distribution deals (eg web based sales), a reduction in handset subsidies or by offering SIM-only packages.
  • Assessing the impact of 3G technologies, which allow significantly higher rates of data communication with handsets. What data services should the new MVNO offer and to which segments?
  • The forthcoming liberalisation of radio spectrum in the UK will lead to an expansion of the range of businesses which are able to use radio spectrum for mobile services, and hence to the opportunities available for MVNOs too. Legal Issues

The first legal hurdle is to decide on how to structure new operation. One option is just for the new company to enter into a contract with the underlying MNO governing the provision of access to its network. Although this has the virtue of simplicity, it may be easier to obtain funding or to gain the agreement of the MNO if the new business is instead set up a joint venture between the brand owner and underlying MNO. The best example of this latter arrangement is Virgin Mobile.

Whichever structure is chosen, the next legal task will be to agree the services agreement between the MVNO and the MNO. There will be some important considerations here:

  • Determining the services to be purchased. In most cases MVNOs take additional services from their MNO suppliers such as access to the network management systems, SIM provisioning, billing, and CRM. Negotiating a wholesale service is more than just the provision of wholesale minutes and data services.
  • Ensuring that the new MVNO is not disadvantaged by the MNO in terms of the quality of service customers receive.
  • Planning for termination – the MVNO will want to ensure that it could, at least in theory, seamlessly switch its service to another MNO without interruption to customers. This may necessitate, for example (where permitted by local law) that telephone numbers are allocated not to the MNO but to the MVNO
  • Branding – the agreement will need to be clear on how the new service will be branded, and on what, if any, reference will be made to the underlying MNO’s network;
  • Roaming – will the MVNO be able to offer its customers international roaming, and, if so, how will this be arranged?
  • Access to interfaces – the MVNO may need access to various of the MNO’s systems and interfaces, whether on SIM Cards or on the underlying network, in order to provide its service. This is often something MNOs are reluctant to agree.
  • Ensuring that the MVNO can meets its legal obligations towards its customers -such as giving them free access to the emergency services, and the ability to "port" their numbers when they switch operator. Schema and MVNOs


Schema and MVNOs

Schema is a leading management consultancy to the communications and media industry. Its clients include leading telecommunication operators and equipment suppliers, broadcasters, content/service providers and regulatory bodies. Its success is built upon being a high quality, focused consultancy, specialising in providing business, marketing and technical support to the industry.

Schema has an unrivalled track record in the provision of consultancy support to service providers, MNOs and regulators in the MVNO field. Recent work includes a project facilitating the launch of post-pay and prepaid MVNO services for a major UK brand, part of a joint-venture with a mobile operator. Schema has also worked on the development of MVNO revenue and cost models for regulators and carriers across Europe, and on a number of feasibility studies with other service providers seeking to enter the market.

Stephenson Harwood and MVNOs

Stephenson Harwood is a business law firm based in London. With a dedicated technology practice, lawyers in the team have a particular focus on communications work. They have a thorough knowledge of the legal, regulatory and practical issues which businesses face in the sector, and members of the team have spent periods of time working on secondment both for the industry regulator, and for clients such as Three and COLT Telecom. Recent work undertaken by the team in the mobile field includes negotiating the financial clearing-house arrangements for a mobile operator allowing it easily to offer customers an international roaming facility, and negotiating SIM card and handset supply agreements. On the regulatory side the firm’s lawyers have advised in relation to the "national roaming condition" as it applies to O2 and to Vodafone, and have assisted with setting up the Virgin Mobile MVNO operation in Australia, and with the sale of one of Lebanon’s GSM operations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions