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Whitepaper How Mvnos Can Take the Path Towards Business Success

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Whitepaper How Mvnos Can Take the Path Towards Business Success How MVNOs can take the path towards business success Whitepaper Table of Contents Introduction..................................................................................................................................................................................................... 3 Why is the mobile market such a hard-to-resist opportunity?...................................................................................................................... 4 MVNO operational models ............................................................................................................................................................................. 5 Embracing the MVNE opportunity ………………………………………………………………………………………………………………………………………………………….. 7 MVNO business models and marketing approach.......................................................................................................................................... 8 MVNO strategic planning ...............................................................................................................................................................................13 Cannibalization. Reality or just a myth? .........................................................................................................................................................14 Business strategy – the recipe for success......................................................................................................................................................16 Adding innovation by embracing social media...............................................................................................................................................17 Regulatory position.........................................................................................................................................................................................18 Next generation MVNO and online convergent charging...............................................................................................................................19 Conclusion ......................................................................................................................................................................................................20 R Systems in the MVNO landscape .................................................................................................................................................................21 / How MVNOs can take the path towards Introduction business success The MVNO market is now over a decade old choose to encourage the vertical separation of and numbers more than 800 operators in “production” and “distribution”; In a space Europe, America, many Asian countries and odyssey, this would ultimately lead to the the Middle East (including nearly 200 breakup of HNOs and to all mobile service operator-owned MVNOs). Yet their number is providers becoming virtual. expected to exceed the number of operators by mid 2013. As a sector, the MVNO model is In this paper we shall examine the current remarkably active with launches, buyouts and MVNO landscape, the MVNO operational and failures and many more projects in customer segmentation models, key preparation. MVNO market share passed 10% challenges MVNOs should address before and in several West European countries and, after launch in order to enhance their success. despite countless unsuccessful attempts, Furthermore, we will emphasize the role of forecasts are very promising. online charging capabilities to strengthen MVNOs market positions, enabling them to In a more avant-gardist approach, some see become serious competitors in a saturated MVNOs as the future model for the whole market by flexibly and rapidly launching industry. HNOs (Host Network Operators) innovative services and service bundles, increasingly outsource their RAN and core boosting their chances of serving untapped network operations, as they are no longer niches. perceived as main competitive differentiators. At the same time, more MVNOs invest in online billing and infrastructure, as they are more aware that not only competitive price, but also flexibility and fast time to market of new services could be the key to their business success and growth. In some respects the two business models seem to be converging. In the future, regulators too may page 3 Why is the mobile market such a / How MVNOs can take the path towards hard-to-resist opportunity? business success Global mobile connections have reached 5.3 sustainable margins with lower retail tariffs incumbents, which have complex, billion in 2010 and are expected to hit over 7.5 and far fewer customers than incumbents cumbersome legacy systems, costly to manage billion by 2015. In spite of the tough economic provided that they develop an auspicious and maintain, MVNOs start their business environment from 2008 and 2009 impacting business model and negotiate a favorable using uncluttered new systems which can give global mobile revenues, we are now facing a HNO agreement them a distinct advantage from the outset, slow recovery in terms of year-on-year growth enhancing their chances for differentiation worldwide with the exception of Europe. Integrated marketing increases customer’s and business optimization. Despite data services growth in importance, lifetime value. By focusing on specific niches, global revenue growth still depends on voice launching personalized campaigns and offering revenues and appears set to remain the appealing content-based services or greatest contributor to mobile operators’ fashionable or cost effective handsets, MVNOs revenues in the coming years. On the other can leverage their brand and enhance their hand, as mobile technology advances faster customer base and at the same time enjoy a than ever before, the demand for bandwidth lower than average customer churn rate and wireless usage is increasing exponentially, through service personalization. Customer therefore many opportunities are arising to lifetime value might increase as MVNOs can exploit these types of services. enhance their service offering with targeted bundles and cross-selling activities. By Low CAPEX – small steps towards success. addressing specific needs the quality of With an appealing service model, the entry service increases and the perceived value of threshold for MVNOs to start their business their product offering is maximized. In the and gradually adapt their business even with a case of incumbents, such promotions might small customer base is becoming a viable cannibalize existing profitable customer business segments. Low OPEX cost base. Lower CAPEX, reduced Maximized efficiency and gaining a volumes of operational activities and limited competitive advantage by using brand new employee numbers enable MVNOs to achieve operational systems. In comparison to page 4 / How MVNOs can take the path towards MVNO operational models business success To highlight the MVNOs’ position in the A broad range of operational models were MVNOs usually concentrate on a specific mobile environment we can say that they are tested, from the lightweight “reseller” MVNO market segment such as low-cost, youth, players who lack at least the radio network on that essentially re-sells airtime bought from an business or ethnic categories. which the virtual network is based. At a HNO, through to the “thick” or “full service” minimum this means they don’t control their MVNO that operates its own customer care, Thin MVNO (Reseller) own spectrum allocation or own their radio billing system and even parts of the core Service provider MVNO access network (RAN), paying HNOs for the network. actual network usage. Enhanced Service Provider We may also classify MVNOs according to their customer business model; Full Infrastructure MVNO Radio Core Application & Customer Sales & Billing access network services care marketing Reseller (Thin MNO MVNO) MNO Service provider MVNO MNO Enhanced service provider MNO Full infrastructure MVNO (Thick MVNO) page 5 / How MVNOs can take the path towards MVNO operational models business success Most of the MVNOs today are simple In addition to their own billing and customer benefit all consumers and players in the resellers. They usually have a well known care processes, enhanced service providers market. Spectrum shortage has allowed only 3 brand and a retail infrastructure and focus on usually have their own IN or NGIN (Next to 5 mobile service providers to operate with a sales and on leveraging customer Generation IN) which allows them to have full infrastructure in a country via an expensive relationships, reselling services on margins, complete control over their business and and prolonged licensing process. the pricing being agreed with the HNO. They service offerings. The enhanced service have control over their sales processes and providers usually run their own value added Using such advanced MVNO business models, their marketing processes, but they usually services platforms such as SDP, voicemail, competition will develop a healthy climate for differentiate only on pricing, brand identity missed call notification, collect call, roaming everybody and advantages for all those and value. The main advantages of this model call back, vPBX, mVPN, prepaid. Having their involved: the newcomers, incumbents and, are its fast time to market, low startup costs own NGIN and SDP, MVNOs become serious most of all, the end customers. and HNO availability to embrace
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