MVNOs…the term is so 1990s, right? Think again. Mobile virtual network operators have been around for nearly 20 years, and there’s a reason for that - they’ve found success in both niche and broad markets, in virtually every country in the world.
Recent research published by Allied Market Research forecasts that the global market was valued $52 billion in 2016, and is projected to double, reaching nearly $103 billion, by 2023, growing at a CAGR of 10.6% from 2017 to 2023. In the United States alone, more than 100 MVNOs serve the market, utilizing the networks of AT&T, Sprint, T-Mobile, Verizon, BCE, Rogers and Telus to offer varying levels of service.
Despite some high-profile crashes of MVNOs (remember Disney Mobile and Amp’d Mobile?) in the mid-2000s, MVNOs have continuously reinvented themselves, offering services specifically geared towards their specific niche market. Some offerings are more feature-rich than others, but they all have staked a claim within their desired customer base.
However, there’s one type of wireless competitor that hasn’t seen runaway success, at least in the U.S. market: cable operators. Cox’s efforts earlier this decade were notoriously curtailed after only one year, with the company blaming an inability to compete with its established rivals. But just last year, the company said it was keeping its options open on the MVNO front.
Last year and the first half of 2017 have seen significant activity from cable operators in the wireless space. Charter Communications and Comcast each activated their respective MVNO agreements with Verizon in late 2016, and Comcast launched its Xfinity Mobile service in June in select markets.
In its 2016 FCC filing, Charter was just as aggressive: “Charter intends to leverage and expand its existing Wi-Fi service, work with MVNO partners, and, at the appropriate time, invest in its own licensed spectrum based wireless network,” the filing said. Analysts peg a 2018 start date for Charter’s mobile service launch. Both Charter and Cox are also reportedly talking with Sprint about MVNO deals as well.
In Europe, cable operators have found strong success offering a quad-play of services by utilizing the MVNO model, but also through acquisitions to build their mobile footprint. What’s their secret sauce that the U.S. operators and others around the world can use to replicate these successes? They already have access to the customer, so what are the stumbling blocks, and how can they be overcome?
Let’s first look at the goals of the cable operators - i.e., why is this market so compelling? Adding wireless services through an MVNO arrangement can help cable operators:
Reduce customer churn by offering targeted products / brands
Reduce prices without affecting the premium brands
Offer innovative services, for example, new generation services-focused MVNOs / IoT MVNOs
Increase market penetration by targeting low-penetration segments
Grow customer stickiness by offering multi-play and digital access services
A Range of Business Models
An operator’s first step on the road to becoming an MVNO is determining what business model to embrace. Ownership of business and functional domains (such as marketing, billing, customer care and others) determine the business model that a company adopts. Many companies start small, then realize they have bigger marketshare ambitions that may require bigger investments - oftentimes even investments in the form of acquiring an operator with a wireless network. Because of this, MVNOs can be categorized as light, hybrid or full MVNOs based on their business/operational models. Light MVNOs might own marketing, sales and customer care functions, while hybrid MVNOs take on these functions as well as pricing and billing, and the service platform (all equipment and activities aimed at the design and provision of services). A full MVNO also takes on the core and access networks.
As cable operators venture into wireless services, all aspects of business processes and associated systems are impacted:
Sales processes – For example, how to incorporate wireless products sales and fulfilment / porting of numbers, handsets sales
Customer care – How to train your customer-facing workforce for this change? Who should be trained? How do processes need to be adjusted?
Fulfilment – Provisioning, services, SIM cards and number management all need to be considered
Other areas that also need consideration include engineering, procurement, human resources, legal, fraud...the list goes on and on. The impact on each of these areas needs to be considered for a cable operator to have a smooth MVNO - and overall business - experience.
It’s this middle ground where cable operators and others venturing into the MVNO space often trip up. It’s not a network thing (full MVNO) or a marketing and sales thing (light MVNO) - it’s the things like service creation, provisioning, fulfilment and billing that can make or break a business case for cable operators in the MVNO space. All of the piece parts that the operator has managed to make work for TV, voice and Internet services don’t always translate one-to-one with the addition of mobile services - especially those using the network of one (or more!) third-party mobile network operators (MNOs).
An End-to-End Requirement
The successful launch of an MVNO doesn’t really involve a secret sauce. The reason some MVNOs succeed while others fail often comes down to simple planning and execution. Every detail needs to be considered and resolved, mapping to existing processes or creating and adhering to new ones. At a high level, a checklist might include the following elements that span business operations planning; marketing, sales and distribution; and technology planning:
Assess existing business processes
Assess applications that support the business processes
Assess available information (data)
Conduct a wireless launch processes gap report
Create action plan to address gaps
Create framework to support the wireless strategy
Process metrics / KPIs
Process analytics plan
Create a change management plan
As the MVNO market continues to offer opportunities and promise, new entrants will continue to find it compelling. For cable operators with existing customer bases, entering the mobile market seems like a sure win. However, determining the business plan and understanding the end-to-end scope of work required is key to creating an ensuring, successful mobile business.