A new report from Signals Telecom Consulting has looked at the various factors behind the resurgence of mobile virtual network operators (MVNOs) in Latin American markets.

"Failed attempts to attract operators not present in the market by means of spectrum tender processes are forcing regulators to consider new options to increase competition. Those failures were explained by the high cost of deploying new infrastructure and acquiring customers, together with the constant demand for additional bandwidth by mobile networks operators (MNOs). As a result, the MVNO business model is presented as an alternative to achieve increased competition in the offer of mobile services, as it provides a new tool for operators to increase the MNO bandwidth while offering other market players -mainly Pay TV operators such as Megacable in Mexico and DirecTV at regional level - the possibility of complementing their offering with mobile telephony," pointed out Jose F. Otero, President of Signals Telecom Consulting.

MVNO launches will depend largely on the contractual restrictions that the MNOs choose to impose on the companies interested in operating in such a manner.

"The strict coverage restrictions that were to be complied with by the no longer existing Bolivian MVNO Cotas Movil could be considered to have been the main reason for the shutting down of the operation. Furthermore, increasing spectrum limits is no guarantee of the entry of MVNOs if there is no regulator to require them to lease it. This is basically because MNOs use the lack of bandwidth as the main argument against the entry of new competitors," explained Elias Vicente, Senior Analyst at Signals Telecom Consulting and author of the report.

The report indicates that the MVNO model in Latin America is at the third stage of its development, noted for more mature markets, less reticent regulators and greater pressure by market players interested in offering mobile services.

The first phase took place at the end of the 90s and the beginning of the current decade and mainly reflected an overflow from the frenzied enthusiasm in Europe for MVNOs to help recoup the investments in 3G licenses. The second stage took place with the ephemeral appearance of various MVNO schemes, such as CTBC and Vivo in Brazil. The third phase shows diversification of the MVNO models, including a) models intended to complement an operator's bundled offering, such as that of Maxcom in Mexico or UNE in Colombia, b) models used to provide increased coverage for operator mobile users whilst they build their own nationwide network, such as Allegro in Ecuador, and c) those that see MVNOs as an opportunity to expand into other markets, such as the case of Personal Argentina in Uruguay.

The proliferation of convergent offerings by landline operators and CATV companies increases the pressure for the inclusion of mobile telephony services that will permit them to offer quadruple play.

"The need for replicability in incumbent operator offer forces operators such as Cablevision Argentina, Inter in Venezuela and Axtel in Mexico to explore the possibility of offering mobile services, which in addition to providing a new source of revenue would help them to reduce their rate of customer loss," concluded Vicente.