On Friday, Vodafone Malta and Go Mobile announced that an amendment to their interconnection agreement had been approved to enable the transiting of calls to and from Mobile Virtual Network Operators (MVNO) number ranges.
It was music to Simon De Cesare's ears. The chief executive officer of Bay Mobile, Eden Leisure Group's mobile telephony arm which is set for launch around the end of the month, is all fired up to see the project get off the ground.
Talks with Vodafone and Go with a view to setting up a mobile operation on the back of an operator's infrastructure began early last year. The vision was to expand the Bay brand by offering its growing youth customer base tailor-made services. An agreement was reached last June.
"The beauty of the MVNO is that we don't have to invest in acquiring the spectrum and the platform," Mr De Cesare explains. "We have complete ownership of our rates, our tariffs, and our relationship with our customers, which is very important to us as we are working on leveraging our brand.
"We are not 'techies'. We are in the business of knowing our customers and offering better quality than what is on the market, be it with the cinemas, the radio station, and bowling alley."
MVNOs first came into being thanks to Virgin in the UK in 1999 but the project didn't really take off until 2003. MVNOs still do not feature in most countries, but Mr De Cesare says network operators are realising that it is an opportunity to build revenue even though they are introducing a degree of cannibalisation and competition within their own network.
"If network operators don't have a focus on a particular market, like the youth market which we are targeting for example, they save a fortune on advertising and staffing and still service that market," he points out, adding that Vodafone and the Eden Group have a long-standing corporate relationship and have embarked on joint initiatives like the Vodafone IMAX Theatre and the Vodafone Tuesdays cinema drive over the years.
In the process of negotiations, Vodafone brought in Aspider Solutions Malta, a mobile virtual network enabler (MVNE) which signed an exclusive wholesale partnership deal to provide branded mobile services using Vodafone's infrastructure and network capacity last October.
"Aspider brings with it a great deal of knowledge," Mr De Cesare explains. "It operates over 15 MVNOs in the Netherlands, two or three in the US, and has ambitions across Europe. It has invested heavily in establishing a hardware centre here which will allow it to attract players with varying subscriber targets to kick off profitable MVNOs."
Mr De Cesare admits the mobile telephony project is complex and the largest the Eden Group has undertaken, but the objectives are clear and simple: Bay Mobile will launch a single tariff pre-paid plan.
"Our rates will obviously have to be very competitive," he points out. "We have not actually come out with our rates yet - if we did, they would be copied by tomorrow. Young people are mainly texters, but we are not excluding the talkers either."
Bay Mobile will offer core services from launch and gradually introduce the services the youth market is crying out for. Mr De Cesare says extensive in-house research has revealed young people want cheaper data rates, more content, ringtones, good coverage, and competitive roaming charges. Thanks to Vodafone's 2G and 3G networks, the possibilities are numerous. Bay Mobile will support number portability, but is offering a limited amount of 897 prefix numbers to subscribers so that they can identify with the Bay brand.
Bay Mobile will have one retail outlet in St George's Bay and a nationwide distribution network for top-up scratch cards of 1,500 shops. Most services will be available online at www.baymobile. com.mt.
Mr De Cesare is especially pleased with the feedback so far. "The response has been phenomenal. We offered potential subscribers to Bay Mobile a half-price reduction on tickets to the DJ Tiesto event, which will be held at the Eden Arena on September 20. Over 500 people signed up. Considering they do not know what rates we will be offering, that is significant. We are also seeing between 5,000 and 6,000 enquiries online every day."
There will be other attractive offers tied to Eden Group's business on Bay Mobile's launch and after that.
At least one other MVNO is in the offing in the short-term, but Mr De Cesare is very confident about Bay Mobile's business model.
"Other MVNOs will probably target a different market to ours," he says. "If we look at the surveys, we are number one in all age groups up to 49. There might be a five to ten per cent overlapping market, but the predominant market is very separate. If there is a competitor in the youth market, we will focus on our brand which will be leveraged to our advantage, plus we have other businesses which competitors will not have. We have loyalty from our customers and loyalty comes with the brand. They grew up with it, they know it, they trust it. Like for like, we believe they would be more likely to switch over to us."
Mr De Cesare was reluctant to divulge the term of the agreement with Aspider, but was quick to point out that Bay Mobile was not going to be short-lived: "Many MVNOs have a short lifespan because they buy in, build the brand and then sell it off. Our brand is integrated with our entire business. We are not developers. We are operators, constantly talking to our market though the radio, the cinema, the health club, bowling, the events at the Eden Arena. We have a relationship with our market and a distribution means.
"Our extended market, the 14-35 age group, is a good 100,000 to 120,000 people in Malta. Last year, there were 27,000 new subscribers joining one network or another - many of those were young people whose parents were buying them their first mobile phone. Many of them will already be listening to us, many of them know us through our cinemas, and there is a lot of loyalty and awareness of the brand. We are confident we can win over a decent chunk of the market."