Member log in

The perils of being a virtual mobile operator

Telecom has decided to keep its new 3G WCDMA network, currently under construction for June 2009 launch, to itself - or at least until 2011.

That's bad news for TelstraClear, whose mobile phone service is a resold version of Telecom's current CDMA network, due to be switched off in 2012.

TelstraClear spokesman Chris Mirams said Telecom's statement was in line with the position it had always held with his company, and came as no surprise. Mr Mirams says access negotiations are continuing and won't comment further while they're under way.

Nevertheless, TelstraClear's travails show that life is not always easy for a company that buys wholesale access to a telco's cellular network - making TelstraClear a Virtual Mobile Operator (VMO) in industry parlance.

In April last year, TestraClear said it would not build its own cellular network, favouring instead forging ahead with a VMO arrangement to offer a mobile service via Vodafone's network. But by June, TelstraClear's wholesale arrangement with Vodafone had foundered amid reportedly ill-tempered talks.

With Vodafone already in the midst of rolling out its own 3G WCDMA network, perchance TelstraClear could again switch camps? Sure, as long as TelstraClear puts a $10 million good behaviour bond into an escrow account before negotiations begin, jokes a source close to Vodafone. (At least, I think he was joking; Vodafone's official position is "no comment".) I don't think life will ever be straightforward for VMOs; technology shifts the telco landscape so quickly, regulations erupt at random from the government, and customers are fickle.

Regardless, Vodafone has a string of new VMO deals coming up over the next couple of months. The first to be announced is with relative minnow Black + White (the company is launching with the help of M2, a specialist in helping VMO's with billings and other back-end systems).

Frankly, a VMO's deal's have to be pretty keen to lure customers away from the big boys, but there's nothing on privately-held Black + White's website that holds oh-my-God-I-must-switch appeal, though I can see the option to upgrade or downgrade your plan every month is going to peel some customers from others (even if it's hell on Black + White's cashflow projections).

Look for a lot more beef when Orcon announces its own VMO deal with Vodafone, which will no doubt offer some killer plans, albeit with pricing no doubt contingent on the customer signing up to other Orcon services.

More by this author

Signup to free NBR email alerts here

Post new comment or question

Login to use your NBR member name
Full HTML is not supported but you can use the following tags in your comments:
Link: <url>link</url>
Quote: <quote>text</quote>