Mohan Kuman Sundaram is chairman and co-founder at Plintron, enabling customers with innovative mobile services worldwide.
Mobile virtual network operators (MVNOs), which are leading the wireless “wave of the future,” traditionally focus on sales and marketing by leveraging their brand value. But what are they and how are they useful?
MVNOs are defined as operators using the network of a Mobile Network Operator (MNO) with other services outsourced to either the MNO or intermediaries, such as mobile virtual network aggregators (MVNAs) and mobile virtual network enablers (MVNEs).
These wireless opportunities have already taken off in places like Latin America, Europe, Asia, and in the United States. They are particularly popular with consumer brands, ethnic groups, communities and affinity groups like soccer and other sporting clubs, as well as with religious groups. For example In Austria, Red Bull has successfully extended its brand to MVNO service by providing value-added content, exclusive benefits like event invites, and merchandise that’s appealing to its audience. Similarly, British retailer Tesco has extended to Mobile services in the U.K., Ireland, Slovakia and the Czech Republic. Italian Post, Standard Bank South Africa, and Australian energy giant AGL have all launched MVNOs.
Why Launch An MVNO?
There are several benefits of launching an MVNO, which can include adding a lucrative business stream by brand extension, synergy with existing business, an increase in customer loyalty and engagement, community leverage, or strengthening customer relationships.
Let’s look at each of these in greater depth:
• A captive customer base: The key drivers for launching an MVNO are engagement with a company’s current customer base, access to under-serviced or niche segments, the ability to give differentiated value propositions, and potential synergies with existing businesses. All of this is possible within a captive audience or customer base, keeping all content delivery within a specific audience for maximum impact.
• Brand extension: MVNOs empower brands to offer an extension into mobile services which leads to an additional revenue stream and helps to increase customer loyalty and engagement. It also provides an additional avenue for cross-selling other products and services owned by the brand. For example, we see many banks setting up MVNOs due to the increasing convergence of banking and telecom.
• Synergy with existing businesses: Energy and gas utilities may offer MVNO services to offer converged services as a package and also add value by offering “connected home” apps. Broadband and fixed-line companies also may go the MVNO route to diversify and offer mobile services.
• Leveraging existing communities: MVNOs typically offer differentiation and customized services and tariffs, as they usually focus on niche segments or affinity groups (like linguistic, religious and cultural groups, and sporting clubs) by offering customizations including closed user-group tariffs and value-added services.
• Additional revenue opportunities: Segment-focused MVNOs can offer customized and very specific services. For example, data-focused or machine-to-machine (M2M) MVNOs can cater to specific Internet of Things (IoT) use-cases like telemetry and telematics applications. These segments are normally ignored by MNOs as these are low ARPU services but a specialized MVNO can focus and build a viable business case for catering to these segments
Getting Into The MVNO Universe
The MVNO business offers an exciting opportunity for a brand with more than 5,000 footfalls per month at its stores, or many visitors to its websites. For example, companies in sectors like consumer goods, utilities, banks, mobile handset and SIM distribution, IoT and retail can extend their brand to include mobile services.
But how does a business become part of the MVNO universe? Intermediaries like MVNAs can make setting up an MVNO easy, with an end-to-end package including wholesale airtime and roaming tie-ups apart from the entire SaaS stack, enabling a quick service launch.
MVNAs can also lower entry barriers with scalable plug-and-play solutions.
ROI And The MVNOs Of The Future
You might be wondering about the return on investment for MVNOs. Most see it in the form of improved customer stickiness, lower marketing and promotional costs, more responsive customer care, and additional revenue opportunities—all of which derive from the main attraction of the customized experience. Therefore, you may see even more MVNOs soon, coming from banks, travel agencies, energy companies, and even bands that seek to stay connected to their fan bases.
The most attractive aspect from the consumer’s perspective is access to custom tariff packages and bundles in addition to exclusive value-added services and content.
Are there downsides? Yes. Slower speeds due to lower priority given by the MNO can be an issue in a few cases; however, regulators worldwide are ensuring equitable treatment to MVNOs.
From a brand viewpoint, developing and sharing exclusive content offers a window into the consumer’s current world, while also building a receptive audience for the foreseeable future—all without the intrusion of privacy or division of their attention on outside influences. That makes the MVNO experience worth it for many audiences.