Highdeal Video

What do MVNOs want to be when they grow up? Recorded
at Mobile World
Congress 2008

Upcoming Event

Billing & OSS World Conference & Expo, April 29-May 1, Chicago

Highdeal will be exhibiting and speaking at the 2008 Billing & OSS World Conference & Expo, the premier event for business and operations support systems.   Highdeal will be presenting educational sessions on Telco 2.0 and Extreme Transaction Processing and will also host an interactive workshop alongside Hewlett Packard entitled, “Upgrading to Best-in-Class Revenue Generation: Billing 2.0” during exhibit hours at Highdeal’s booth.  Please visit us at Booth # 401 or contact us to set up a meeting.

Customer Announcement

The Carrefour Group selects Highdeal for its mobile telephone services
In the highly competitive MVNO sector, Highdeal Transactive® has enabled Carrefour Mobile to rapidly launch a new postpaid offer combining voice, SMS/MMS and content.

Media Coverage

MVNOs Are Here to Stay, Vanilla Plus - February 2008 - Fergus O'Reilly
Mobile Virtual Network Operator (MVNO) subscribers [in the U.S.] are set to rise to 29 million by 2010, creating a market which is estimated to be worth over $10.7 billion, says the Yankee Group. However, more recent entrants to the MVNO market are learning from the missteps of their predecessors.

Banking and m-payments offer new niche for MVNOs
©Mobile Communications Europe - March 2008 - Gareth Willmer

Willmer examines the market potential for Eastern and Western European MVNOs looking to expand into banking and m-payments and he speaks to industry leaders about how and when European MVNOs will start exploiting this new niche.

Push segmentation even harder

MVNOs have long targeted very specific groups of users. Ethnic groups, age ranges, brand or social affiliations and so forth. The MVNOs have succeeded in many cases because the larger MNOs had much more cumbersome mechanisms for identifying and reaching addressable groups. However, this is changing, and MVNOs will need to work even harder in 2008, pushing down “the long tail” of segmentation. The ability to combine in new applications and services (such as content delivery, m-commerce and positioning technology) should enable more novel categorisations.

Don’t stand still

The mobile marketplace is increasingly becoming saturated. Incumbent MNOs, facing rampant competition, are becoming much more aware of their weaknesses in areas like segmentation and targeted propositions. Innovative approaches by MVNOs will be swiftly copied by the larger players. Consequently there is a strong argument that MVNOs adopt a more flexible business model, which anticipates having to change product and marketing strategy on a regular basis. This will make long-term planning more difficult, and will put a premium on having enabling systems in place that can cope easily with change.

Distribution, distribution, distribution

A number of 2007’s high profile MVNO failures can be blamed in large measure on a lack of adequate distribution channels. Apart from the SIM-only players, MVNOs need to get adequate retail coverage to push their products. This in turn has many related implications – inventory management, well-trained staff who can talk customers through the proposition, and the ability to deal with retail organisations unused to the complexities of the mobile phone business. For mainstream MVNOs, this means high-street stores like supermarkets or maybe banks. For niche-focused MVNOs, more innovative avenues such as ethnically-oriented outlets may be more appropriate.

Look at new two-sided revenue models

Historically, almost the only sources of revenues for operators (MNO or MVNO) have been customer subscriptions, plus interconnection fees. But with continued price competition on retail mobile rates, plus regulatory limits on termination fees, other options are being explored. Probably the most visible group of new business models are around advertising sales (eg Blyk), but there are also options that look to exploit new relationships with governments, software developers, healthcare agencies, financial companies or other service providers. 2008 should see more MVNOs starting to be creative with their business partnerships in this regard.

Funding and negotiation

Around the world, early 2008 has seen economic storm clouds gathering, with the damage from the banking and credit sector spreading more widely. Against that background, it seems likely that external funding sources for speculative MVNOs will apply higher levels of scrutiny to new business plans. Conversely, many MNOs may be looking to ‘hedge’ themselves against possible downturns in revenues, and may be open to innovative wholesale deals as long as there is a clear win-win rather than a cannibalisation risk. In both cases, those MVNOs with a strong pedigree – and ideally parent companies with deep pockets – should be in a stronger place to negotiate with both host networks and financial backers.

Leverage the trend towards multiplicity

In many developed markets, mobile handset penetration is now well above 100%. This means that many users now routinely carry two, three or even more mobile devices, often with separate subscriptions or prepay accounts. Although counter-intuitive, customers actually seem happy to divide their communication time (and spend) between multiple providers. For MVNOs, this lowers the entry barriers and costs of customer acquisition. By targeting a particular unmet mobile service need for a group of people, it should be relatively easy to persuade them to use an additional device and subscription – initially just for that specific requirement (perhaps international calls, or specific content), but then expanding over time to displace usage with other service providers.

IT and billing systems

Many of the other tips discussed here imply the need for flexibility on the part of the MVNO. But to achieve high levels of market-responsiveness, it is necessary to have a set of tools that readily accommodate change. Many traditional telecom billing and OSS platforms have rigidly-defined, hard-coded structures that can hinder innovation – especially after a service is launched. In particular, the ability to bring in new revenue streams (such as advertising), or blend prepay, postpay and various content/service-billing mechanisms, is often constrained.

Consider opportunities in the enterprise market

After a number of years as a “maybe” category for MVNOs, 2008 finally looks to be the year in which corporate-focused service providers emerge and flourish. This is a very different proposition to consumer MVNOs – typically, successful players will have established enterprise relationships, be able to provide consulting and integration services, and have strong credentials in adjacent technology areas like security and PBXs.

Develop handset skills and exploit new device capabilities

Although many recent MVNOs have relied upon SIM-only models, plus ‘vanilla’ commodity phones, this makes it very difficult to offer services beyond basic voice and SMS. Managing settings and configurations for MMS clients or browsers across a broad range of handsets is complex and can result in large opex bills for support. That said, selecting and customising handsets is also an onerous task for an MVNO. But fundamentally, it needs to recognised that many consumers are drawn to particular devices rather than operators. Those providers which can offer unique products or user experiences stand to be able to benefit from future innovations in content and services, rather than risking continued voice/SMS price erosion.

Going forward, the reducing cost of 3G handsets, and the wider use of browser and Web 2.0 capabilities should make these tasks simpler. In addition, more technically-sophisticated MVNOs are starting to take advantages of handset features like WiFi and smartphone OS’s, with other developments like NFC (near field communications) and GPS also receiving attention. Separately, it is also worth MVNOs assessing the options for delivering services on “non-phone” cellular devices – particularly modems for PCs, but also consumer devices like cameras, in-car systems and consumer electronics products. Amazon’s wireless “Kindle” e-book device and service is a good example of this.

Consider the evolution of triple/quadplay models

The pre-2008 MVNO model is being updated to fit into the new telecommunications reality. Many service providers are looking to bundle some combination of broadband, fixed voice/VoIP, mobile service and broadcast or IP-based TV. More generally, various operators are outsourcing or partnering for elements of their service or infrastructure – the industry is moving towards a much broader view of “virtualisation”. MVNOs will need to work around this trend – some will themselves come from a fixed/broadband background, while others will find it necessary to become ‘virtual’ DSL providers, or partner with TV companies, to provide competitive bundles to customers. Clearly this creates much greater complexity in terms of service definition and distribution – but in the longer term it may be the only way to combat churn, except for very granular mobile-only niches.