Empirical Analysis of User Adoption of Mobile Virtual Network Operator Service: A Case Study in Saudi Arabia

Abstract

Mobile Virtual Network Operator (MVNO) is a new type of telecommunication service provider that has recently received much attention in developed countries. MVNO buys network capacity from Mobile Network Operators (MNO) at a wholesale discount price and resells it to the end users after adding value such as brand appeal, packaging or other extra services on the top of the traditional service. Previous studies have focused on mobile network infrastructure, market structure, government regulations and the relationship between MNO and MVNO to understand the success of the MVNO business model. However, user preference for adoption of MVNO services has not been thoroughly investigated in the past. During the past few years, several Middle Eastern countries have made major improvements and achieved penetration rates similar to that of European countries. This paper aims to discuss user preference for adopting MVNO services in the Saudi Arabian market. Structural Equation Modeling was used for analysis. The results showed that lack of customer value with current MNOs drives the potential adoption of MVNO. The results also showed that Saudi Arabian customers have limited dissatisfaction with their current operators and that discount MVNO is the most highly favored. © 2010, JAPAN SECTION OF THE REGIONAL SCIENCE ASSOCIATION INTERNATIONAL. All rights reserved.