Thursday, 23 February 2012

Free entry to French Mobile market

Free MVNO France

Are MVNOs Free in France?

Its an interesting twist on words, calling a new operator "free" but that is a comment for a coffee later. And no, the answer is nothing is free in France, you pay for everything, even being an MVNO :)

What is interesting is the MNOs starting to see the strain of Free. When Virgin Mobile was launched in the UK a similar trend occurred, whereby many people had just had enough of  the complexity and uncertainty of spend on traditional tariffs. In this sense, Virgin Mobile had close to 2 million customers when it had expected to have 200,000.

So what does this mean for MVNOs? In reality these people are the early adopters / first movers. Those whose dissatisfaction with their present offering is so strong that they will take anything new on the market. This is an interesting phenomenon I have seen from my last few MVNO launches in mature markets, whereby you can allow for a certain take-up, sometimes even a breakeven figure of users, to be attracted to a new network just by addressing a niche well enough to capture a single digit percentage or even percentile of a mature market's monthly mobile churn.

So what does the MNO do when and MVNO has its breakfast?

So these were the first movers. In the next two years we will see the me-too's and followers follow, typically 70-80% of any given market, and these will be best attracted by mainstream, niche and other MVNOs that successfully target and attract users from any given market segment that the MNO itself is weak in. So this is a clear sign that French MNOs need to open up to wholesale and capture these niches as strategically and innovatively, and as quickly, as possible.

In many MVNO business models, I have had this element of customer attraction, which I call "churn soak-up" at anything between 5% and 40% of an MVNOs take-up in the critical first 6 to 9 months of operation. The amount of take-up is directly proportional to how well this MVNO business plan, brand, product and proposition addresses a niche, and to some extent how much and what type of marketing is done to address the market and the strength of the MVNO's brand. If you are willing to invest the time (and some money) in getting both the brand and the proposition right and targeting the brand/proposition well (all within sensible SAC margins) then this element of take-up can be in the double digits of growth and soaking up significant percentages of churn in a market.

Update 2013, post 2012 networking conference in Paris: The host MNO did nothing, another MNO took the two biggest MVNOs as full MVNOs on their network! as the Dutch (KPN) say: wholesale is better than no sale!

The flipside? when done well, these customers stay with the MVNO brand that successfully addresses  the niche, long after they have churned from the "rebound" operator, in this the rebound fling is Free in France :) (yes I got to one of the amusing twists of its name :)

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