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With price wars dominating the mobile market, MVNOs have to find a way to build customer loyalty and make sure their customers don’t flee when a better mobile offer shows up. Acquiring ‘cheap’ customers can be great for customer acquisition, but running after £10.00 customers should get MVNOs thinking and worrying about the long-lasting impact on their profitability and sustainability.

According to Thomas Frederiksen, Head of Tweakker, a leader in MVNO connectivity, MVNOs must chase high-value subscribers.

“The problem of adopting a low-price strategy is that after on-boarding a new customer, s/he forgets the MVNO, enjoys cheap service throughout the contract lifetime and eventually churns for the next cheap mobile deal. For any MVNO, this means low customer revenue. MVNOs must be able to increase customer lifetime value rapidly by driving higher service consumption and better customer loyalty. Most MVNOs operate on tight profit margins, with discount MVNOs having a monthly ARPU lower than £10.00, when the acquisition cost can go up to £40.00 per subscriber. With end-users always chasing the best mobile deal, MVNOs might never recover the acquisition cost, thus requiring injections of capital to stay afloat.”

Only a handful of MVNOs are commercially successful Frederiksen says that MVNOs can turn this situation around and change the monetisation balance in their favour by minimising the subscriber acquisition cost (SAC) and getting the customer lifetime value at least three times higher than SAC.
“Gaining an understanding of how monetisation and subscriber acquisition are manifested in the MVNO setting comes as a first step. Subsequently, reaching business growth targets can be achieved by mitigating the acquisition costs and cultivating customer interactions for increased customer spending.”

Rosy Future

Gavin Sweet at Simetric Telecom foresees a very buoyant future for the MVNO market, where the platform’s opportunity for growth is driven by new developments in converged services where the big network operators don’t add value for end user businesses, MVNO’s are ideally placed to position themselves as real drivers of innovation and customer service.

“As we see it this big opportunity comes in the form of the forthcoming GDPR and MiFID II regulations which to one degree or another will affect all businesses. There’s, quite rightly, a lot of noise about this in the media at the moment, which gives MVNO’s a great opportunity to come to the rescue of businesses who can’t invest large sums to ensure they don’t fall foul of the legislation, particularly in financial services where MiFID II and GDPR have an enormous impact.

By opening up new platform opportunities for converged services particularly in call-recording where archival, instant retrieval and security and call analysis give MVNO’s a real opportunity to make telecoms add to the bottom line and add value.
Key to all this is how the service will be packaged, installed, managed, controlled and billed. Specialists like Simetric who act as both aggregators and enablers can provide MVNO’s with plug and play SIM’s which are preloaded with call recording solutions, number porting and client set-up, we also offer portal or API based management controls, as well as all the normal CDRs and management information you would expect. Ensuring that the services offered are fully white labelled for MVNO’s and importantly frictionless for end users.”
Sweet concludes that focus should be on the product and the commercials, not the technology.

“Deep integration with network and systems engineering to the operators to become a full blown MVNO is unnecessary and generally beyond the reach of most organisations – we regularly see organisations who abandon their projects because they are too ambitious. You can get what you want off the shelf now as a kind of virtual MVNO, a thin MVNO, by being a tier below the enablers or aggregators, without any loss of service control, billing or customer relationship.”

What’s the point of MVNOs?

Managing Director and Founder of 24 Seven, David Samuel is basically saying ‘What’s the point of MVNOs?’
“Sometimes, it’s important to look back in order to look forward. MVNOs aren’t new, but to many mobile users and businesses, the term remains yet another piece of alienating telecoms jargon. We’re told by Ofcom that MVNOs promote competition in the UK mobile market, but has their objective been achieved?

The short answer is no. The infrastructure owners and big businesses still rule the roost, and are happy to keep MVNOs as bit-part players. Is that a bad thing? Not necessarily. It gives businesses such as 24 Seven the agility to meet customer’s needs and serve them as equals. Two telecoms giants in particular have been singled out for diabolical customer service just this year, so this is where MVNOs need to make ground, for the good of the market.

It’s vital that MVNOs find a niche and innovate, in order to differentiate themselves from the hundreds of other names out there. What is clear, is that the ‘race to zero’ mentality isn’t doing anyone any favours, as companies cut the very things that customers demand, such as customer service, in order to ‘buy’ business.

The MVNOs that have become household names could probably be counted on one hand – Lyca and Virgin Mobile spring to mind – but are these examples a ringing endorsement of MVNOs? Again, probably not.

Customers should be at the heart of what MVNOs do, regardless of their size and reach, but this sadly isn’t always the case. The service that MVNOs provide for their consumers, and the way they communicate with them is crucial to setting themselves apart from the rest.
In such a saturated market, it’s key that MVNOs realise that they will suffer if they simply look to replicate what others are doing. By pinpointing their key strengths, MVNO’s can play to them, and ensure that the products and services they provide are high quality and are perfectly tailored to the needs of their market. A more focused approach makes much more sense and can help MVNOs to stand out from the crowd.
MVNO’s not only have the ability to provide something which could totally change the way that users communicate by opening up new possibilities to them, but they can entirely change the industry through their innovation, which is why they are so instrumental in leading our industry forward.”

What is holding this market back?

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Fintan Lawler, EMEA General Manager, Interop Technologies, says the mobile industry is unquestionably changing—forcing the need for MVNOs to develop new business models that align with the evolving trends of today’s hyper-connected world.

“However, the host MNOs who abuse their dominant market position to make MVNOs uncompetitive and deny them access to new products and services at a ‘retail-minus’ pricing structure is holding this market back. The lack of effective regulation to open competition in some territories and fair pricing furthers this barrier and additionally deters risk-averse new investors from entering the market.

Read the full article on CommsBusiness Magazine.

Published by CommsBusiness October 2, 2017