The first batch of Chinese virtual mobile carriers is expected to launch their services in the first quarter of 2014. These companies have no experience whatsoever in the business, and it’s anybody’s guess what business models they will adopt. However, success stories overseas may offer some valuable ideas.
Last week Chinese authorities granted licenses to the first batch of 11 private sector mobile virtual network operators (MVNOs) to resell mobile telecommunications services. The nature of their business can be likened to sub-landlords. One way to add value to the property is by renovating the house before leasing it out.
London-based Truphone is one such case. The company now provides services in 10 countries and cities including Australia, Germany, the United States and Hong Kong.
Whopping mobile roaming fees are a headache to a lot of people. Truphone manages to make a profit by offering customers a standard local rate rather than charging roaming rates while they are on the road.
How is that possible? Truphone works by piggybacking on local mobile networks in each country. The company leases local carriers’ capacity to build up its network across different countries to combine with its in-house service centers.
It also owns a technology that enables a single SIM card to work on multiple phone numbers. This allows users to make overseas calls to places where services are provided as though they are local calls without going through the hassle of changing into another SIM card or using a different phone number.
Truphone’s services are never the cheapest when compared with local rivals, but for people who work overseas or frequently travel, they offer a lot of savings.
Sprint, the third-largest mobile operator in the US, has also been working actively with MVNOs to open up niche markets.
One example is the company’s tie-up with Defense Mobile to reach US soldiers and their family members.
This market segment is estimated to have 51 million people. Defense Mobile leases network from Sprint and brings to the party specialized applications targeted at their needs, including more user-friendly money wiring platforms.
Sprint can leverage on Defense Mobile’s unique understanding of the segment and increase businesses in a more cost effective way while the latter does not have to invest heavily on a network.
Such a win-win pact is also possible in China’s telecom market.
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