Analyst warns of brutal mobile competition

Over 100 mobile virtual network operators launched in Europe last year

The rise of mobile virtual network operators (MVNOs) in Europe will put pressure on operators to offer additional value to their subscribers through bundled data and voice packages.

Failure to do so will lead to acquisitions, according to a new report by Bena Roberts, a wireless analyst at Current Analysis. 

An MVNO such as the UK's easyMobile provides mobile phone services using rented spectrum from a regular operator. Such companies typically operate as mobile discounters and focus on the market for pre-pay callers.

Over 100 new MVNOs launched services in Europe in 2005, causing a near 50 per cent drop in voice tariffs, Roberts claimed.

"The onslaught of MVNOs has been paramount to cheaper calling rates across Europe and has forced mobile operators to implement more transparent tariffs and better options to impress, win and lock-in customers," she wrote.

In Germany E-Plus and Vodafone showed the best response to the rise of low cost competitors.

E-Plus introduced flat rate calling plans and launched two MVNOs, while Vodafone introduced CallYa, charging consumers only for a call's first three minutes and then offering up to one hour of free talk time.