The MVNO Revolution – Are You Ready To Be Virtualized?
Author: Mitchell Klaassen, CTO Asia Pacific, MATRIXX
Consider Australia, where a whopping 46 percent of customers churned in the last three years. Nearly half of those who churned in the last year went to Mobile Virtual Network Operators (MVNOs). Given that the reasons for churning are mainly high or unwanted surprises in their bills – especially within the young adult age group – MVNOs clearly need to be pretty agile to support the greater transparency, clarity and simplicity that customers need.
The ‘age of the MVNO’ has changed out of all recognition. When brands first entered the market over a decade ago – Virgin is an obvious example – they had very little but their brand to attract customers. The networks that they piggy-backed on basically gave them bandwidth and limited access to product catalog and billing capabilities.
Gradually this began to change, as the MVNOs started building tactical in-house agility and innovation and so began to attract greater numbers of customers. At the start, the quality of the brand was enough. In the UK Virgin Mobile was voted the best quality network, while T-Mobile was voted the worst. They were the same network. Such was the power of the brand.
Mobile Network Operators (MNOs) started to realize that the wholesale opportunity was a significant one along with MVNEs (Mobile Virtual Network Enablers) who saw the gap and the opportunity to bridge it.
It is widely accepted that the next two or three years will continue to see a massive rise in the number of MVNOs. Some will be specialists in a certain field such as healthcare, others will offer a scaled down, web-based service and will therefore compete on price, some will partner with powerful brands in other industries for a joint value proposition and others will have market models which are disruptive in ways not yet thought of.
More and more the larger telecoms companies, such as AT&T, TeliaSonera and Telenor are launching new MVNOs themselves and also attempting to improve their MVNE offering. Ali Baba, in China, is the biggest MVNO launch ever, with an existing e-commerce business waiting to be leveraged. In Spain, Tuente – now part of Telefonica who, in the words of the old ‘Remington shaver’ advert loved the company so much they bought it – transformed their business from social media platform to MVNO because they saw what their target market needed, and was not getting from the incumbent.
Many MNOs however are still yet to truly change their mindset. They simply don’t provide an agile and rich enough MVNE offering. This has resulted in the rise of dedicated MVNE providers and solutions that enable potential MVNOs and not tie their hands behind their back.
If you’re an MVNO whose ability to adapt and differentiate is critical to your existence and then an MNO tells you that you can only have access to this but not that and, by the way, you’re only allowed 2 product changes per month…then you’re going to seriously consider a dedicated agile MVNE who can take you forward hand in hand rather than chopping one off.
So the business model needs to be re-thought. As the age of the ‘contract’ dies and customers rebel against being ‘tied in’ for 12 or 24 months, helped by people like John Legere urging people to “Jump,” the MVNO opportunity must be updated too. No longer can an MNO offer MVNOs the same old ‘functionality.’ Agile access to systems and data, and thus the ability of MVNOs to change prices and offer pro-active customer service, must be open where before they were very restricted. Essentially, an MNO/MVNE must offer full transparency from the outset and in real-time.