After years when consolidation was the main trend in Europe, now there are rising numbers of new entrants appearing to diversify the market. Some of these will be focused on specific enterprise or private network opportunities, and will increasingly be enabled by the opening up of shared, flexible or vertical-specific spectrum.
But there are also new mainstream operators, which have acquired national spectrum in order to challenge the incumbents in the consumer mobile broadband space. The most famous example is Free Mobile of France, which was launched by its parent Iliad to massively disruptive effect in 2012. Iliad went on to acquire spectrum in Italy – divested as a result of the merger of Three Italia and Wind – and has now launched services there too.
Another way into the market is to launch as an MVNO and then, like Rakuten in Japan, upgrade to being a network deployer, either on a national scale, or as a ‘heavy MVNO’ which invests in its own core and localized RAN (sometimes small cells for a city or industry). Traditionally, MVNOs have mainly targeted low cost services and have rarely achieved more than a few percentage points of market share, but the fragmentation of the service provider chain in the 5G era will usher in more impactful, and profitable business models based on pure MVNO, or hybrid, platforms.
The latest new entrants in Europe come from both categories. One is another Iliad venture, GoMo in Ireland, which for now remains an MVNO; the other is Spusu, an Austrian MVNO which is upgrading to become a full operator.
GoMo is a subsidiary of Eir, the former incumbent wireline telco which was acquired by Iliad’s owner, French billionaire Xavier Niel early last year. Eir also has a mobile network of its own, which hosts GoMo, but it has only about 19% market share, dwarfed by Vodafone and Three (which acquired O2 Ireland), which have 36% and 33% respectively. It may be that GoMo, if it follows Niel’s playbook, will have more market impact than its host, and may become a primary brand and have greater influence on the actual operation of the network in future.
When Niel concluded his acquisition of a controlling stake in Eir, the scene seemed to be set for disruption on the lines of Free. He has some of the same advantages in Ireland, including a strong broadband base (Eir has 2m customers across its services) with which to backhaul small cells and WiFi homespots, greatly reducing the cost of delivering wireless access and supporting multiplay bundles.
GoMo started commercial operations two weeks ago and announced a plan which – at €9.99 unlimited – undercuts the other providers. The deal is only available for the first 100,000 people who sign up (Iliad Italy had a similar approach and hit the 100,000 subscriber mark within a week of launch, though of course, in a far larger country).
Other signs of Niel’s influence over Eir include cost-cutting programs; and a new TV service based entirely on the Apple TV 4K set-top box. More daring was withdrawal from the National Broadband Plan tender process, followed by an offer to undercut the government’s preferred build-out partner by about €2bn.
So GoMo is the latest in a series of changes for Eir. The €9.99 package offers unlimited calls, messaging and data (with throttling above 80GB). This is significantly cheaper than any other MNO offering. Eirmobile’s own unlimited data, SIM-only plan is currently priced at €14.99 per month for the first six months and then €29.99 after that. The lowest cost option is €10 for a SIM-only plan from the largest MVNO, Tesco Mobile, which has about 8% market share – but that comes with only 1GB of data.
Strong uptake would indirectly benefit Eir, and it may be that Niel believes it will be easier to disrupt the market with a new brand and approach, than by trying to revitalize Eirmobile itself, while cannibalizing some of its services with a low cost offer.
In Italy, Iliad launched with an entry level plan priced at €5.99 per month, and signed up 635,000 customers between its May 29 launch and the end of June. It reached the 1m mark within 50 days and now has about 4m customers, or 4.7% of the market, according to regulator Agcom. The €5.99 offer is no longer available, but its 50GB plan costs €7.99 a month.
In Austria, MVNO Spusu says it will take part in the country’s second 5G auction next year in order to build its own network, and it also aims to extend its MVNO activities into Italy in early 2020.
It will aim to disrupt the three MNOs – Telekom Austria, T-Mobile and 3 Austria – though like GoMo in Ireland, its growth potential will be limited by the small size of the market (under 5m in Ireland, under 9m in Austria).
Spusu has offered services based on 3’s network for four years. It has already acquired regional licences for 5G in Burgenland and Lower Austria (which includes capital Vienna), during the country’s first 5G auction in March. These can be activated from the start of next year, but local reports say that Spusu plans to turn on 5G networks in parts of the two regions this week, in pre-commercial mode. These are likely to be very small in scale, especially as 3 has very limited 5G outside some parts of Vienna, so the opportunities for roaming and wider coverage via the MVNO deal would be restricted.
The newcomer aims to develop its own network, initially to target customers with poor mobile services and coverage, as well as some enterprise bases, filling in gaps in the other MNOs’ footprints while retaining the MVNO arrangement indefinitely (assuming 3 agrees).
“The frequencies may not be used until 1 January 2020,” said Spusu CEO Franz Pichler, when regulator RTR confirmed the spectrum awards earlier this year. “For us, this is the deadline on which we start in various industrial areas, as well as in regions where there is still no good 3G or LTE coverage.”
The real test of Spusu’s ambition will come with next year’s auction, and RTR’s plan to keep prices relatively low may help it to get serious about 5G.
The regulator recently set out its auction proposals, arguing for low reserve prices and relatively light conditions to encourage broad roll-out, though with minimum coverage obligations for roads and railways.
The regulator said it wants to be “investment-friendly”, and so proposes 20-year licences and a reserve price totalling just €295m for spectrum across three bands – 700 MHz, 1500 MHz and 2.1 GHz. That would include the sub-GHz spectrum – often priced at a high premium because of its value for supporting cost-effective coverage, and its relative scarcity.
Licences will not mandate wholesale access, after a recent review of MVNO requirements, so the coverage obligations are the biggest condition. RTR is asking for
minimum speeds of 10Mbps downlink/1Mbps uplink to 98% of highways, expressways and selected rail links, and to 90% of federal and state highways; as well as 3Mbps/ 3Mbps to 900 underserved locations. If operators deploy to more than these 900 locations, and address some of the next 1,100 that the regulator classes as underserved. they will receive a rebate on their spectrum bids.
Spusu also plans to launch a new MVNO, on Wind Tre’s network in the very competitive market of Italy, in the first quarter of next year. The signs are that it will take on Iliad in a price war, in a country where there are now five MNOs (Vodafone, TIM, Wind Tre, Iliad and Fastweb).
Spusu is owned by Austrian tech firm Mass Response, which provides technology for tele-voting, among other things, and uses its own platforms to support swift and flexible launches of mass market mobile plans.