In a progressive move to formulate policy reflecting the needs of an entire industry, The National Regulatory Authority in a major Asian market issued a public request for feedback from industry stakeholders.
In a progressive move to formulate policy reflecting the needs of an entire industry, The National Regulatory Authority in a major Asian market issued a public request for feedback from industry stakeholders. The issue at hand was the licensing of MVNOs, and the regulator wanted input from industry stakeholders on its proposed approach to issuing MVNO licenses in the country.
It was the first time this particular regulator had requested industry input in this manner. And it gave stakeholders a potential precedent-setting opportunity to influence policy. But the request was so unexpected that our client, an incumbent operator, was caught unaware. Its Regulatory Affairs Management function had not yet worked out a strategic or regulatory position on MVNOs, let alone their widespread licensing.
Taking a position on the licensing of MVNOs requires an incumbent to run a gauntlet of complex considerations. On the one hand, MVNOs extend potential distribution channels, can draw in niche customers with levels of customization an incumbent may not be able to offer, and can help network owners tap incremental revenue from very low-use customers. On the other hand, MVNOs can drive down prices and cannibalize incumbent business. And if (and often when) an MVNO gets large enough, the power dynamic between an MVNO and the incumbent can shift, threatening profitability and the operator’s overall business model rather than be simply a channel for additional revenue.
The policy implications are enormous. Clear boundaries between MVNOs and incumbents and guidelines and restrictions on business models are crucial for balancing the benefits and risks of opening a market to MVNOs. Working through a policy position requires a thoroughgoing examination of the nuance and implications of scores of potential market scenarios and potential business relationships.
Unfortunately, a deadline for submitting a position to the regulator meant that time was of the essence. Our client needed to quickly formulate an internal position on MVNO licensing and its regulatory environment along with a cogent and reasonable response to the regulator’s consultation document.
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