The greatest myth of the mobile virtual network operator trend is that all you need to be successful in wireless is a brand that is demographically successful, geographically successful or successful in another industry. On the surface, the wild popularity of the most successful MVNO, Virgin Mobile, has only served to support this myth. But, if it were that easy, wouldn't many more companies have pursued the MVNO strategy a long time ago?

As it turns out, the devil is in the details. Beyond the recognition of the brand, the appeal of the storefront and the distinctiveness of the packaging, there is the back office. If you know a budding MVNO that doesn't know what a back office is, you might just want to tell them that it's everything happening behind the scenes to keep their brand from being associated with poor customer service. That should get their attention.

As wireline carriers, retailers, content companies and other types of non-wireless firms look to package wireless services to the customers in their core market segments, the MVNO trend has quickly given birth to a spinoff trend, the rise of the mobile virtual network enabler (MVNE).

An MVNE can save an MVNO from suffering a back-office fiasco. “A lot of people might have thought they could just go buy some phones from Sprint and go out there and be an MVNO, but it's not that easy,” said Sean Mallon, vice president of marketing at billing and customer care vendor Sentori Systems.

While a few MVNOs might choose to manage the intricacies of their own operations and want to be on intimate terms with their wholesale carriers, many won't feel that way because it will be money, time and effort spent away from their core businesses, said Karen Mitchell, vice president of marketing at EUR Systems, a self-described business process outsourcing firm MVNE functions run the gamut from arranging airtime with a wireless wholesaler to setting up and maintaining device activation, billing and customer service for the MVNO. MVNEs such as Visage Mobile and Ztar Mobile offer these services as a turnkey outsourced solution so that MVNOs never have to go too deeply into wireless operations and still get to reap the economic benefits. Other MVNEs include CSG Systems, InPhonic and Martin Dawes, according to Andrew Cole, senior vice president of the wireless practice at A.T. Kearney.

“The term ‘MVNE’ is a little like the term ‘MVNO,’ in that there is a lot of variability in what people think it means,” Cole said. “It's an integrated set of services, the glue that holds the MVNO together.”

While turnkey MVNEs have been given much of the credit for introducing the MVNE concept, separate companies working together also could perform MVNE functions individually. Sentori and EUR are taking the different tack of partnering to support MVNOs, a strategy which they say exploits the unique strengths of each company while allowing MVNOs more flexibility to pick and choose which MVNE functions they want to buy and which ones they want to support themselves.

“Basically, we're an MVNE without calling ourselves an MVNE,” Mitchell said.

Sentori Systems and EUR Systems are two companies that are both literally and figuratively up the road from each other. Their product offerings are complementary to form a comprehensive MVNE offering without creating overlap, and they are located just two hours away from one another.

EUR is a 44-year-old company based in Mechanicsburg, Pa., that provides back-office services to a carrier customer base of mostly U.S. wireline companies. Sentori is a privately held 10-year-old firm headquartered about two hours south, in Laurel, Md., that has had most of its success with wireless carriers in international markets.

By combining their specialties, they can offer billing, customer care, activation, network mediation, device fulfillment, remittance processing, printing/mailing and contact center services — many of the offerings a larger MVNE or larger billing vendor might provide but at a more reasonable cost.

The genesis of the partnership was the wireless MVNO project the companies undertook about four years ago for Working Assets, the long-distance resale firm known for generating money for charity through mailings sent out with its bills. In keeping with two vendors that can do everything an MVNE does, but without the fashionable tag, Working Assets launched its MVNO long before that term became popular.

Working Assets actually has been an EUR customer for more than 15 years, since EUR has been responsible for assembling and distributing the company's mailings. With the launch of the MVNO, EUR also was going to manage device inventory and distribution for Working Assets. But the one thing that was missing was a converged billing system that would put the carrier's wireless service on the same bill as its long-distance service.

Working Assets learned about Sentori from Sprint, the premier wireless wholesaler from which Working Assets was buying its airtime, said Ted Volchok, vice president of Working Assets Wireless.

“We were looking to add wireless billing to an integrated bill and looking for a vendor who could work with our existing vendor, EUR,” Volchok said. “At the time, there wasn't anyone out there doing what we were looking for. The back office is probably the most challenging aspect of what we're doing.”

“Sentori had a software licensing model,” Mallon said. “We licensed to EUR, which integrated our solution with the landline billing systems they had in place at Working Assets.”

“It sort of opened our eyes, and we wanted to do more business with MVNOs,” Mitchell added. The companies officially announced their partnership the CTIA's Wireless 2002 trade show.

The partners now present a united front to the MVNO market, but they remain firms with distinct product lines and strategic strengths. EUR Systems still brings in 70% of its revenue from U.S. carriers and 30% from international carriers, while Sentori's market results are about the opposite. EUR continues to target wireline IXCs, Tier 1 LECs and CLECs. Sentori remains exclusively focused on wireless. But, when it comes to one of the biggest market opportunities the wireless industry has presented to back-office vendors, they are on the same page.

“Either one of our companies could not have pursued the wireless MVNO market alone,” Mallon said.

The governing attitude of the partnership seems to be whatever makes things easiest for the customer. EUR Systems, with its broader outsourcing experience, often takes the sales lead, but that's not the unequivocal rule. Likewise, while EUR and Sentori have a variety of services they can offer MVNOs, they don't pressure customers to buy the whole package, as many turnkey vendors might do.

“This is a launch platform. If MVNOs want to peel off pieces of it and use that, they can,” Mallon said. “It's very early in the MVNO market, and some start-ups want everything in a box so they can get started. Other companies will seriously consider a component approach. Others maybe will want it turnkey, except for one aspect.”

The fact is that new MVNOs often don't know exactly what they want, so it pays to be flexible. Sentori and EUR have to start at a basic level of helping these new service providers define what they want in a back office and how their operations will be managed.

“The expectation among non-technology companies is that setting up billing for an MVNO is like setting up Microsoft Word, that there's a form for it. If anything, they come into it thinking it's not a big deal, and it is a big deal. We need their help to fill out all the requirements before the MVNO can go any further.”

Another area that requires structural definition is the relationship between the wholesale carrier and the MVNO. The business arrangement between these two companies can be a delicate one. For example, Sprint does not want to support MVNOs that might compete with Sprint too directly, and it doesn't necessarily want MVNOs selling every service and device in the Sprint catalog.

“MVNOs can sell only the devices and services that Sprint allows them to sell,” Mitchell said. “It's usually a subset of what Sprint has and what the MVNO's focus market is.”

Most turnkey MVNEs will manage relations between the host carrier and MVNO ostensibly by keeping the two parties cut off from each other. The MVNE takes care of all the pesky details of the airtime contract, and in doing so creates more value for itself by becoming the middleman on whom the relationship depends, according to Mallon and Mitchell.

“It could create a problem [if the MVNO wants to deal directly with the host carrier, but the MVNE insists otherwise],” Mallon said.

Sentori and EUR ultimately want to be flexible to different scenarios and different models MVNOs might pursue. “We'll stay out of their way if the MVNO wants to manage the path to the carrier,” he said. “Or we'll make the introductions if that's all they want.” Sentori and EUR now have relationships with such potential wholesalers as Sprint, Cingular Wireless and Verizon Wireless.

The same flexible attitude also goes for managing device inventory and fulfillment. If an MVNO doesn't want to own a network, the chances are that it will not want to own a 100,000-square-foot device fulfillment center, either.

“EUR can purchase the inventory of devices from a distributor, or if the MVNO wants handset inventory, that's up to them,” Mitchell said. EUR has provided device fulfillment for some of its wireline clients before, so applying its experience to wireless wasn't a great leap.

EUR also has existing contact centers that can absorb the customer calling volumes created by MVNOs. In an MVNO deployment, the contact centers are linked directly to Sentori billing systems. EUR's existing remittance processing centers currently handle up to 500,000 payments per month, and the company may look into building a new remittance processing center if the MVNO market proves to be healthy enough to support one.

Despite all the progress and momentum, questions still linger about the potential health of the still nascent MVNO market. Many of the large retail and content brand-name MVNOs that have been predicted for the last few years have yet to develop. For every Virgin or 7-Eleven that has launched an MVNO, there is a Disney or Time Warner that remains on the sidelines.

There are also remaining questions about the long-term viability of the MVNE business model — especially for those enabling MVNOs that might have more aggressive future plans. “As MVNOs mature, they'll want to reduce risks, and one way of doing that is to take on these tasks [in-house],” Cole said.

But that's also a reason why partnering to support MVNOs might not be such a bad idea: It alleviates risk. Neither Sentori nor EUR are start-ups leveraged by financial backers who are hoping for an MVNO boom. They are merely two companies who have combined complementary products and services to pursue a new market. If that market goes bust, they might go their separate ways and continue to succeed in their core businesses. For now, however, they are sharing the promise of a new market.