Thursday, 15 June 2017 22:17

10 reasons why the LINE Mobile service is a MVNO setup

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To be or not to be an MVNO To be or not to be an MVNO
Thailand’s Telecoms regulator (NBTC) has summoned representatives of the mobile operator DTAC and the OTT messaging app LINE, to determine if the new service between the two “LINE Mobile” is a MVNO, and as such requires a MVNO license.


Updated June 26, 2017
. Thailand’s National Broadcasting and Telecommunications Commission (NBTC) had invited the chat application provider LINE Company Thailand, to a meeting at the NBTC office, this morning June 26, 2017 to explain its setup with DTAC.

Line Company Thailand - Letter to NBTC about DTAC MVNO

LINE: IT’S NOT US, IT’S DTAC - AND IT’S NOT A MVNO

The secretary-general of the National Broadcasting and Telecommunications Commission (NBTC), said that LINE Company (Thailand) Limited told the NBTC this morning about the cooperation with DTAC’s subsidiary TriNet Co., Ltd. (DTN) regarding the LINE Mobile service.

The company also provide a formal statement (letter to the left), stating that Line Thailand is not a mobile carrier, and not a MVNO, but that the Line Mobile service, is a service of DTAC's subsidiary TriNet, who has bought the rights to use the brand “LINE Mobile” (brand licensing arrangement), and that this it is not related to the Japanese Line Mobile at all.

This does however conflict with a couple of facts i.e. that the Line Mobile app available on Google Play, clearly states that this is a app from LINE COMPANY (THAILAND) LIMITED

LINE Mobile on Google Play from LINE COMPANY (THAILAND) LIMITED

Furthermore the website for the service th.linemobile.com is registered at ICANN to the LINE Corporation in Tokyo, and hosted on Amazon in Singapore with Naver's nameservers ns1.naver.jp / adns1.naver.com. If the service was DTAC's then why is it not hosted on Total Access Communication PLC (DTACNET) own servers in Thailand and own nameservers i.e ns1.dtacnetwork.co.th?

The website is now open to the public in invitation mode, but coincidently the About Us section, as well as other links on the page is still not available. Like a branded reseller MVNO is does mention “Powered by DTN” on the bottom left on the page

Line Mobile - Powered by DTN (DTAC TriNet)

Both DTAC and LINE Corporation are companies trading on the stock exchange, however it has not been possible to find the announcement of DTAC or DTAC TriNet (DTN) purchasing the rights to the LINE Mobile brand.

The letter of explanation from Line does not provide any facts, instead the NBTC should ask to see the commercial agreement between DTAC and LINE for the brand licensing arrangement, which should be public, as both companies trade on the stock exchange.

 

MNO-MVNO COMMERCIAL AGREEMENTS

Mobile operators commercial agreements with MVNO’s have changed over the years from the initial revenue share, retail minus and cost plus models to also include capacity based pricing, commission based and brand licensing.

MNO MVNO Commercial models

A setup like the one with DTAC and LINE would fall under the Brand licensing model

DTAC LINE MVNO Commercial model

Other MVNO setups similar to DTAC/LINE

In April 2014 WhatsApp CEO and co-founder Jan Koum announced "The WhatsApp ePlus SIM card is WhatsApp’s first partnership with a carrier to launch an MVNO brand" when WhatsApp entered into an MVNO arrangement with the German operator ePlus (Now Telefonica)

Prior to that, and perhaps a more known example of such a commercial MVNO setup, is the trademark license agreement between the US mobile operator Sprint and the Virgin Mobile brand, where Sprint licensed the right to use the Virgin Mobile brand in the US and Puerto Rico from UK-based Virgin Group.

Likewise Virgin Mobile Qatar was a brand licensing partnership agreement between Virgin Group and Qatar Telecom (Qtel Group). However at the time, the Qatari telecoms regulator ictQATAR stated that Virgin has not been offered any type of licence and should not be considered an MVNO, and that Qatar still only had two mobile operators.

The decision raised serious concerns from Qtel's competitor, which claimed that Virgin Mobile was acting as an MVNO, which was against the terms of its own licence, and that the regulator had not issued an MVNO licence. The regulator changed its decision to allow Virgin Mobile to operate, and officially requested that Qtel shut down the Virgin Mobile service in 2011

Virgin Mobile, is/has been a sub-brand MVNO in Australia, Canada, Qatar, India, UAE and the US.

Energy drink Red Bull and its MVNO Red Bull Mobile, is/has been a sub-brand MVNO in Austria, Belgium, Hungary, Poland, South Africa and Switzerland.

 

AIS: If Line Mobile falls under the MVNO concept, Line and DTAC must get approval 

AIS chief executive Somchai Lertsutiwong told Bangkok Post "Personally, I think it's simply a marketing gimmick that is unlikely to affect the overall mobile industry". However, he said the NBTC needs to investigate whether Line Mobile and DTAC runs under the mobile virtual network operator (MVNO) model or not.

If Line Mobile falls under the MVNO concept, Line and DTAC must get approval from the telecom regulator prior to making a commercial launch, he added.

He added that AIS is working more closely with over-the-top companies to tap into OTT opportunities. AIS does not see OTT players as rivals. "AIS is looking to grow its business beyond organic strategies, or grow the business from within," said Mr Somchai, but declined to give elaborate details of the plan.

 

EARLIER STORY: NBTC secretary general Takorn Tantasith told local media yesterday that the two companies were summoned to the meeting, in response to a complaint about the planned launch of “LINE Mobile”, to check if the new service was a mobile virtual network operator (MVNO) on DTAC's TriNet network.

If so, it would need to seek a MVNO license from the NBTC. However If it was found to be a supplementary service, a MVNO license would not be necessary, Mr Takorn said. 

DTAC attended the meeting but LINE representatives asked that the meeting be postponed as they were attending the company's annual business strategy meeting in Tokyo. Therefore the NBTC had move its decision to later this month. However, we don’t think you have to wait that long.

10 REASONS WHY THE LINE MOBILE SERVICE IS A MVNO SETUP

Based on the details and information regarding Line Mobile Thailand shared so far.

  1. They use their own branded LINE Mobile SIM cards. (Although the barcode shows it’s made by a vendor in Pakistan which is the same place Dtac gets their SIMs from)

  2. Users are able to control their own LINE mobile account via the associated LINE Mobile app, which means it must have access to the SIM card holder’s account on the DTAC network.

  3. Users can sign up via the app and register/activate the SIM by taking a photo of themselves holding their Thai ID card (not an approved standard for SIM registration by the NBTC), which again shows it is linked to the network to be approved.

  4. The SIM will be delivered to the users, which shows you can’t use the service with your existing SIM, so it is not a OTT service.

  5. You can top-up via LINE pay, which shows a deep integration to the network system/accounts of DTAC.

  6. LINE Mobile in Japan was launched as a MVNO on NTT DoCoMo’s network in September last year.

  7. Users can toggle between free unlimited data at 256 Kbps - or switch to full speed data when needed, which shows a direct and real-time integration to DTAC’s network.

  8. When users wants to sign up for a LINE Mobile SIM they are presented with numbering options, which indicates that a number range has been dedicated to the service.

  9. Users are able to check their outstanding balance directly from the associated app, which indicates the direct connection to call data records.

  10. The setup is similar to other messaging apps who have entered the MVNO space i.e. WhatsApp entry as MVNO on E-Plus in Germany in 2014, selling prepaid WhatsApp SIMs along with their associate app.

 

LINE MOBILE MVNO APP


The damage control both DTAC and LINE Thailand practiced when the story went public, shows a few other irregularities i.e. LINE Thailand said LINE Mobile was not part of LINE Thailand, which is weird because when you download the app on Google Play or Apple, it says the developer is LINE Thailand + the website for the project th.linemobile.com is registered to LINE Thailand. 

LINE, not being able send a single representative to attend the NBTC meeting today due to LINE presenting its 2017 strategy in Tokyo - also raises a few questions. i.e. if it just a OTT partnership setup then why could DTAC and any representative from LINE not explain it to NBTC today?

DTAC has also been unusually quiet with public comments on the matter, which in itself seems like a giveaway, that this is more than just a OTT co-operation.

MVNO TYPES AND OPERATIONAL MODELS

At the lowest stage possible, LINE Mobile in Thailand would be a Reseller MVNO (Branded Reseller)A reseller MVNO will either operate under its own brand (LINE Mobile) or co-branded with the mobile network operator (i.e. powered by DTAC).

In most cases, the branded reseller brings a brand, distribution channels and/or a large existing customer base to the table, from which it can leverage its sales. It is often the easiest MVNO type to get a mobile network operator (MNO) to accept, as the MNO (DTAC in this example) stays in control over most of the processes.

Other MVNOs similar to this, would be Tune Talk Thailand who resell SIMs from TrueMove on AirAsia planes.

However…

Given that the app from LINE Mobile allows users to actively control their account, and to top-up via LINE pay, and own number range, indicates a deeper integration than just a Reseller MVNO.

Which brings us to the next level on the MVNO operation model - a service provider MVNO (MVNO SP) with self-owned SIMs, customer ownership and relationship, as well as the ability to set tariff bundles and packages independently from the retail prices set by DTAC.

Considering that LINE Mobile also promotes pricing on calls to other countries, and that LINE’s normal app; LINE Messenger allows for IP calls similar to Skype/Viber/WhatsApp, it could be an Enhanced SP MVNO model, where they also have been given access to their own home location register (HLR), which allows control of the Mobile Station International Subscriber Directory Number (MSISDN) - a number used to identify a mobile phone number internationally.

WHY HASEN'T LINE MOBILE APPLIED FOR A MVNO LICENSE?

So why has LINE Mobile not applied for a MVNO license, and why hasn’t DTAC made sure they had one?

Let's be clear, it has nothing to do with the fee or process of getting a MVNO license in Thailand. Although there are additional fees that has to be paid once the MVNO is launched and these fees, 1.5% of revenue to NBTC and 1.5% of revenue to the USO fund - is a cut in the margins, and must be taken into consideration, the fee itself, and process of getting the license is pretty straightforward e.g. it is not a spectrum license and neither is the price of getting the license.

DTAC currently finds themselves in a less than fortunate position to put it gently. They have lost a huge amount of subscribers and thereby also the position as Thailand’s second largest mobile operator in terms of market share.

They recently won a bid to become a MVNO themselves on the 2300MHz spectrum of the state enterprise operator TOT, which will take a while before it materializes and pays back.

They have had to take a backseat in the competition between market leader AIS, and now second largest mobile operator TRUE. MVNO has been available in Thailand since 2009 but strangely enough no MVNOs has been able to launch on neither AIS, TRUE nor DTAC.

So much so, that we have encountered claims of the private operators having a “mutual agreement” not to enable MVNOs on their networks. Or, if not the result of a coordinated behavior between the operators, then by deciding individually that MVNO access should be prevented, in which their self-interest causes a collective outcome of resisting MVNOs on their networks.

It is not unusual for operators to indicate to other operators that they want to avoid MVNOs in the market but secretly are very interested and active in on-going discussions with MVNOs, in case one of the other operators decide to launch one.

For DTAC, a MVNO launch (and more than one) would make a lot of sense in order to fight for market share, as the MVNOs they sign up will use their existing user base and marketing to onboard customers to DTAC’s networks while paying revenue to DTAC at the same time.

So DTAC may very well be interested in keeping a low profile regarding MVNO partnerships as much as possible - for as long as possible to avoid that AIS and TRUE will find out that the coordinated behavior of not launching a MVNO has been broken and its now every operator for themselves.

Had LINE filed for a MVNO license at NBTC it would have been a secret for about 10 seconds.

For LINE, it is also a question of keeping it a secret for as long as possible. The “messenger app” business is under intense pressure with everyone copying from everyone. LINE itself changed its strategy from growing new markets, to concentrate and retain what they had, which is Japan, Thailand, Indonesia and Taiwan.

OTT REGULATION AND FINALLY SOME ACTION ON MVNO FROM NBTC

Meanwhile Thailand’s regulator (NBTC) has been very active recently in trying to find a way to regulate (license and control) OTT services like LINE, Facebook, YouTube, etc. All this could not have come at a better time for NBTC, for seven years they have done nothing to promote MVNOs and competition into the market. MVNOs on the state enterprises TOT and CAT Telecom has been dying like flies.

With a MVNO license to LINE Mobile and a subsequently launch on DTAC, the NBTC will be able to say they have now solved OTT regulation but even more so - the dark MVNO cloud that’s been hanging over them for 7 years.

Yozzo

Yozzo is a Telecom Consulting Firm, based in Bangkok, Thailand. The company specializes in MVNO, Devices, Media & Broadcasting - mostly, but not limited to ASEAN. 

 

Yozzo on Google PlusLinkedInyozzo on twitter  yozzo-slidehare Yozzo on YouTube

Website: www.google.com/+Yozzo

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