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Author: Vincent Poulbere
Ten, a new MVNO on Orange's network in France, is launching commercial services based on voice and mobile Internet messaging services, MSN Messenger and email. Ten is a start-up founded by Jean-Louis Constanza, former director of Tele2 in France, and has AXA Private Equity as main shareholder. Constanza played a key role in developing the MVNO model in France and in setting up Tele2's MVNO operations (also on Orange's network).
Ten offers unlimited subscriptions to MSN Messenger and to push mobile email (with support for consumer POP3 mail services). Subscription to either MSN Messenger or mobile email services costs €6 per month, and subscription to both services costs €8 per month. The services use GPRS and are available on Java applications that are downloaded over-the-air.
Ten also offers postpaid voice subscriptions starting from €22 per month for one hour, and has a line-up of three subsidised phones starting from €39.
This is an interesting move. Ten is one of the very few MVNOs in the market bringing differentiation and innovation against what the mobile operators are doing. This also confirms a trend we anticipated for the mobile messaging space - a move towards IP-based services. Mobile operators have so far been very conservative, preferring to protect SMS revenues rather than innovating with new services on a large scale. Also operators essentially promoted their own email or IM services rather than offering access to the popular Internet services. It's therefore natural to see an MVNO attempting to offer the services that operators have basically restricted. Future applications promoted by Ten are not too difficult to imagine: unlimited browsing on Internet sites on mobile phones, access to Internet communities such as MySpace, and maybe later VoIP. Ten also has a plan to offer its services to prepaid users as well, which will help expand its potential market.
After having battled fiercely with the operators to enable the first MVNO deals in France, we can well imagine Jean-Louis Constanza involved in new battles in the next few years: such as getting a wholesale data deal on 3G (it has no deal to use 3G today), or being able to offer VoIP over 3G (Orange currently forbids it).
Obviously, being an MVNO, Ten has constraints on developing these innovative business models. Much depends on the wholesale deal for GPRS data with Orange, and assuming that Ten has to pay Orange depending on the volume of GPRS traffic exchanged, there is a risk in offering unlimited usage of instant messaging and email services. That may be why Ten's voice subscriptions are not very competitive compared to other MVNOs. For example, Tele2's two-hour subscription costs €21.85, while Ten only offers a one-hour subscription for the same price.
We believe that Ten is a threat to mobile operators because it promotes a new model for mobile communication services that operators have resisted - but one that they may have to embrace soon. Ten's success is not guaranteed though - it is starting from scratch with no existing market presence and still needs to perfect its offering (for example, voice prices are a bit too high, and prepaid is not supported). As for all MVNOs in the French market, customer acquisition will be tough because of the lengthy number portability process and operators' handset subsidies, which enable them to lock-in customers for 12 or 24 months. This launch is a first step with limited immediate impact, but with long-term implications for all French mobile players.
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