MVNOs are primarily retail businesses, largely free from the pressure to invest in, and profit from, costly network technology. But they have other challenges. To be successful they must differentiate themselves from some pretty powerful competition – including from their own ‘foster-parent network’.
No easy task. In these days of low-cost services and all-you can-eat bundles, highly competitive markets, and regulators ratcheting down on profits, where is the attraction in starting up any kind of mobile service business?
But mobile is much more than a commodity business. For subscribers, a mobile device is absolutely central to their lives. Many enterprises, seeing mobility as a key part of their digital transformation strategy, would like a piece of this.
New players, new revenues
Few new MVNOs expect to turn a profit out of basic services. They’re more interested in competing for new revenue. In a saturated market, that’s all about differentiation, and offering the customer a better kind of experience. MVNOs offer an opportunity for successful organisations and enterprises to parlay their market success into telecoms.
A phone isn’t just a platform for delivering services. It’s also a great platform for selling virtual or physical products and experiences, and for leveraging brands. Here, telcos have no advantage over leading clothing lines, retailers, entertainers, publishers, sports clubs and many other enterprises.
The enterprise MVNO could make money through branded services and content. Or it could make money as a ‘loss-leader’ – while steering customers towards more profitable lines of business. For example:
· A financial publication could add financial market information and real-time tips to the platform, appealing to a market that still favours conspicuous consumption.
· High-end supermarkets command strong brand affinity – easily converted to an MVNO that could be an integral part of their digital commerce strategy.
· Football clubs and entertainers can draw on a rich stock of content, and make much of it exclusive, free to their ‘brand community’. And could draw on fantastic loyalty from a subscriber fanbase.
But, still, accountants will ask, will the game be worth the candle? Can enterprises really make the revenue that would justify risking capital on such an initiative?
Success is virtually assured
The good news is that for new MVNOs, little capital investment need be risked. An enabling partner – an MVNE – can take a prospective MVNO through the design and launch process, can provide support out of the cloud, running the business on an invest-as-you-grow OPEX basis.
Even OPEX need not be prohibitive. As functional virtualisation replaces physical platforms, outsourcing and cloud-based solutions replace costly licenses and skills, considerable cost and risk is taken out of the initiative. The focus of the MVNO swings away from operation, much more towards innovation.
So who’d be an MVNO? Well if your business engenders strong brand loyalty, brings potential subscribers in serious numbers and with significant disposable income, then the question becomes ‘who wouldn’t?’ An MVNO offers a way to amplify, sustain and build on an already successful brand, and to put mobility at the heart of a future digital strategy. If that can also be achieved at very low risk – why wouldn’t you?
For more on Openet’s support for MVNOs, check out our Digital Enterprise Solutions.