Showing posts with label failed MVNOs. Show all posts
Showing posts with label failed MVNOs. Show all posts

Tuesday 12 February 2019

MVNO Gold #4 Ship Daily

Being true to the Minimum Viable Product in MVNO; shipping daily, Evaluating weekly, planning monthly

This Image from a former Chief Data Scientist of the white house came up in my Linkedin stream and serves pretty much as a catalyst to an article that has been in draft for a while on this blog, so here goes as it is very, very relevant to the MVNO model, and here is a link to the post plus another I could find while checking superficially that it was not fake news ...
These ideals are ones for MVNOs to very much live by
Let's go through the first four bullets in reverse order.

Ship Daily: The importance of the mantra: Ship Daily in MVNO, MVNE, MVNA, MVNx

Possibly the most important bullet on this list is ship daily, and its the one I struggled most with in my early days: I could never understand why investors and potential customers were so wrapped up in a handful of growing sales, but now 20+ years on I get it and cannot understand why some customers so overlook getting a handful of sales and growing it, especially those looking for investment.. Shipping daily, even if its just the handful of SIMs like in the next bullets, means you are getting feedback, you are learning customer patterns, you are leaning how to optimise your service, your time and your processes and what is possible based on practise, not theory. In theory these two are the same, but as we all know in practice they are very, very different. If we then jump to below, a generic me too non differentiated product will not grow, it will stop and start.

In the end customers are also like investors: its very easy to sell a service to someone who's friend or colleague already has it. It's very hard to make your first sale without "daily shipments".

Evaluate weekly: the importance of evaluating constantly and MVNO, MVNE, MVNA or MVNx

If all the daily shipments want a refund, it's easier to manage, adapt and refine with daily shipments than suddenly having hundreds or thousands of refund requests. Weekly evaluation is not always easy: you need a real-time platform (realtime billing, realtime CMS, realtime reporting) to do it properly, but at its most superficial level you need to be editing your products page weekly, looking at the data, looking at your CRM (salesforce etc) or just a sales spreadsheet and looking back at what worked and what needed improvement. Honestly of course! And this is important; people who shy away from this lack either the confidence or experience to be honest and handle failure maturely and learn from it: without this no MVNO will continue to grow or scale.

Starting and keeping true to the MVP is key to success in mobile wholesale; If you are not evaluating weekly what is being shipped daily what you have is a minimum, if you are lucky its a product, but it's invariably not a viable product.

Plan MVNOs in Months

Many MVNOs and MVNEs are truly woeful at planning and spend their time drifting between daily emergencies, fads, whims and red herrings.  Alternatively, others have the worlds biggest project plan and spend their days chasing tasks rather than the yearly dream or the daily sales: the key is i the middle and resides in Monthly planning; what is this and next months target, are we on track (from daily sales and weekly evaluations... ) and most important the dependencies. You have to be able to run before you can walk: if you have not sold 1, 10, 100 or 1,000 SIMs; is that huge deal of 1,000, 10,000 or 100,000 SIMs really going to happen? The answer is "highly unlikely". Even if that big deal does happen, how likely is it to fall apart i the process if you have not cut your teeth on 1, 10, 100 sales: the answer is "highly likely".

Get a spreadsheet, make a list, number them, list any dependencies, and most importantly who is going to do each task and by when.

Its always refreshing to get an agenda like this when someone is speaking

Dream MVNO in years

Do we need to say Dream in years? Sadly we do; even shipping daily, evaluating weekly and planning monthly - mobile businesses take years, if you don't stick to the above mantra mobile businesses invariably never make it as nobody has decades!

I will cover the other parts in an upcoming post / add here so don't forget to follow however you prefer on twitter, linkedin, facebook etc on the top right social icons.

Tuesday 16 January 2018

MVNO Gold Rule #3 - Have a Hard Stop Launch Date

Updated: Have a Hard Launch Date, as early as an MVP possible and Stick to it - MVNO Gold Rules

It used to be a lot easier in the past; with full MVNOs the test window with the MNO could close and take weeks or months to access again, to name but one. However in the new cloud based world its all so flexible and easy that its easy to just keep slipping another month, but I have noticed that with this the number of failed MVNO, that is the ones that never make it to market, not those that launch and fail, is on the up. 

Failure to launch at the earliest is possibly one of the biggest risks to your MVNO every launching or being successful
The problem of missing launch dates is manifold:

The first biggest problem is the seasonal issues you can encounter. While below I explain why seasonality most effects the MNOs and insufficiently differentiated MVNOs, you are still making it harder on yourself, will have smaller uptake, will have a lower success rate, higher customer acquisition cost, have impacts from staff being away (summer, Christmas, etc), find it difficult to react to a sales spike (try asking for more SIMs over Christmas!) have staffing issues, etc, etc, etc.

The second being that its very easy for “golden goose” or “launchaphobia” to set in. Its a simple human nature that is even more exaggerated in business where a normally laissez-faire person can be become a risk-averse freak and a risk-averse freak in their personal life can become and agoraphobic in business: the more you leave something the bigger an obstacle it becomes, and the more prepared you need to be... Face it, most people are not just afraid of change, they are petrified of it

The third being that you leave your product open to corporate sabotage. I say this in a nice way, as it should be called corporate terrorism: at best this is the person who is most risk averse in the team and was probably the least been the decision, starts getting cold feet and seeding doubt. At worst you have these risks:

  1. The corporate terrorist, neigh-sayer, also known as corporate pimp. These are the guys who know all the pitfalls but never have any answers that do not involve burying / over spending / delaying, procrastinating in the name of... put them on QA or something, but not product development.
  2. "Not invented here merchant" - great people to manage operations, terrible in anything customer facing - let them know when its done and have dotted line: on the RACI they should be consulted / informed
  3. The neigh-sayer - send them back to whatever they did that was useful, but MVNO is not for them, as per point 2 above.
  4. “Specialist consultant” These are usually lone wolves, for a reason, nobody else can stand working for them, they have done a few MVNOs in specific areas and now want to branch out to do everything but seriously lack the knowledge. Easily found out by asking how much repeat business they have from MVNOs they have worked on / launched.
  5. The 11th hour dark (trojan) horse. These are usually internal and are very dangerous, like a dormant, deadly virus residing deep in spinal nerves waiting to cripple the business at the last minute spewing out all the concerns that a responsible adult would have brought up ages ago, but with a veneer that is taken as seriously as the manifestation of a format virus usually is. They shut up and put up, but in reality bottle up until the last moment they come in with lines like "as I was not properly consulted", "as per our gated procedure", "has business change been consulted" ... invite them to take their amazing, unique expertise and apply it to BAU, or if they insist on working on something new, suggest they are rated here and invite them to set-up their own business :)
  6. Gaining fat. Literally, like the last bird to fly, the harder it will be as you will be fatter, less fit and juicier to predators. When you fail to launch you invariably get fatter: more people, more resources, etc. and it just gets harder from there, and the juicier and more helpless you become to predators.
  7. The person who does not get the simple difference between beta and production, early adopter and mass market, new product vs established, and tells you how hard it will be to market, support, etc, etc.
I could go on, but have just put the main ones here... Seriously, stop reading this and launch already!

Seasonatily - Launch Dates are not Easy 

Conventional MVNO wisdom dictates that you should not launch on these dates, there are reasons for this and reasons against, however it is more important to launch than not, and these seasonal rules apply more to a fully fledged mass market product, so below I go into how to mitigate these issues in next section.

  • Over the summer as people are away and nobody will see or care for your marketing
  • In the run up to Chirstmas as the MNOs and Handset Manufacturers are spending their big bucks and customers become bessoted with “Free” handset deals.
  • In January as nobody buys a mobile then

It’s better to Launch off Season than Delay

While conventional mobile marketing wisdom, which of course by de facto became MVNO marketing wisdom, dictated that you cannot sell mobile in the following periods
  • Over the summer as people are away and nobody will see or care for your marketing (spot the old school non digital thinking here). You can get around this by launching a roaming offer / summer offer, using marketing tools like "reach on the beach" by Facebook, etc, etc.
  • In the run up to Christmas as the MNOs and Handset Manufacturers are spending their big bucks and customers become besotted with “Free” handset deals. (This assumes the old model where the vast majority of handsets and service was bought from an MNO or an MNO reseller). There are lot's of people who plan to do this, but then the reality of credit checks and undersigning someone else's phone kicks in and they are back looking back at the MVNOs in a key purchase period: be there!
  • In January as nobody buys a mobile then (err, nobody buys from an MNO who has squeezed every drop out of its marketing for the previous two months!) The Christmas phones have a 7 to 30 day return period... and lots get returned... again be there!

The BIG Caveat

Do not launch any old rubbish; there needs to be a USP that you deliver. Just one USP, and delivered. The biggest pitfalls here are
  1.  Not 2 or 3 wishy washy USPs rolled into one, what we call a "pot pourri USP" or multiple hard USPs that have nothing to do with each other "Frankenstein USP" or "Jekyll and Hyde USP". 
  2. Some light "MVNO wash" rebrand of an MNO service, like free social networks (post 2013 when all the MNOs copied the early adopter MVNOs who did this)
  3. Some rebrand of an old MVNO, or some MVNE that has only ever done one type of product / no differentiated services. MVNEs are not all alike, ask your MVNE for references and ask your self do these products really differentiate from the market? if not, you are talking to the wrong MNO / MVNE and failure is only a launch to administration period away!
I cover some of these in the synopsis of one of the 2015 workshop at the Nice Global MVNO conference. However I have added another slide here below that focusses on the single USP for launch.
If your MVNO product does not have a SINGLE, DELIVERABLE, USP then try harder. And no that USP is not low cost!
If you want to run this or another full MVNO workshop or masterclass tailored to your team please use the contact on the right. 

So when do I launch

In sum, while its better to launch, if you can off season, if you are ready in Christmas or June, 1st, get on with it, if your pre christmas launch slips and it means launching 27th December or 2nd January - do it... (you will be amazed how a slip never happens again!). At the end of the day, an MVNO is a retail business, and lives on margin, growth, sales feedback and data, word of mouth, recommendations, etc... all of which start at day 1.

Friday 17 March 2017

MVNO Gold rule #1 - Keep it Simple

MVNO Gold Rule #1 - Keep it Simple

This is the most ignored rule of all and one of the biggest culprit of failed MVNOs, and by that I mean not the launched MVNOs that fail, but moreover the huge amount that never make it to launch due to over complication, which in turn creates delays and cost which moreover lead to uncertainty and uncontrolled risk in the eyes of many - the killer of all things new and venturous!

But that is not possible, you see, when someone is tasked with creating a mobile pricing model, they revert into what I have become to call the Jekyll-Hyde Frankenstein... a freakish monster of all things mobile rolled into one, with every good idea they have ever seen in mobile across the world, ever, in enterprise, consumer, travel, low-end, high-end; you name it; there is a tariff for it and a model behind it!
The first bicycle - as designed by the average MVNO and MVNO consultant as their first launch product *sigh*. Source

The concept is simple - create a first simple MVNO tariff that will

  1. Make your MVNO competitors think you are going nowhere as an MVNO
  2. An MVNO tariff that will only be attractive to your core Niche and not be at all attractive to the masses of freeloaders, fraudsters, etc. If you cannot charge a premium for at least 1,000 or a few thousand early adopter users you do not have a Niche product that will sell and need to go back to the drawing board.
  3. Be attractive to your core MVNO audience and your limited amount of first MVNO SIMs and bandwidth to respond to real customer feedback
  4. Listen to customers and follow your MVNO brand with private, below the line offers that your competitors do not see but your real early adopter customers can promote to your next "me too" customers
  5. Keep MVNO prices within a sensible range to create trust and avoid anything that needs a footnote like Free this*, unlimited other ¹, etc.
  6. Don't be lazy and just do "free social networks MVNO" or "free VoIP app MVNO" which was OK in 2010 to 2015, or if it is part of a wider campaign but now is weak and infinitely copiable.
  7. Leave your MVNO super tariffs for when you are mass market MVNO
This is difficult to do, the MVNO MVP is elusive, but the easiest way to do it is to start early and get whatever you have working first with a USP that is not easy to copy out to market.

Wednesday 23 March 2016

MVNO World Congress Pre Conference Workshop 2015

2015 Pre Conference Workshop - MVNO Marketing

I had the pleasure of running the MVNO world Congress pre-conference workshop in the 2015 #MVNOIS, so as we run up to the 2016 MVNO event in Amsterdam its probably time to upload some of the slides to give you an overview and share some of the experience.
2015 #MVNOIS Pre Conference Workshop 
The workshop was in three parts, this is the first part that focussed on MVNO Marketing, which in my now 16 year of doing MVNOs, is the hardest hurdle after the MNO agreement and MVNE plus all the other service provision contracts selection. The second part focusses on MVNO Data.
2015 #MVNOIS Pre Conference Workshop topics covered
I Will cover the MVNO Data services, MVNO International Roaming, and MVNO Multi-IMSI points in the next few days / weeks running up to the 2016 Conference, as these areas are key, if not the key way an MVNO can differentiate itself from other MVNOs and moreover its host MNO and grow scalability in a competitive mobile market.
An Activity every MVNO should do almost daily!
The first task was to name 3 Big MVNOs that the audience think market themselves well. This is important on many levels.

  • Firstly, if there are none of them in your market you need to ask some serious questions about why and make sure you are not repeating any of their mistakes! 
  • Secondly, it is where MVNOs most differentiate themselves at conception, but most easily compromise on in launch... and to be honest, from there they often never launch and/or never become successful. 
To be a successful MVNO you need to be able to easily access all the needed data on your customers, process this and send targeted below the line packages at them. The key here is that they are below the line, competitors do not see them, customers love and recommend them, but your competitors do not copy them. I want you to think about this as you go through the slides, and I add my 3 top MVNOs further down.
This is sadly where a lot of marketing time is wasted by MVNOs - above the line copy cat price competition - why?
Most MVNOs develop what I cal a bi-polar frankenstein approach to Marketing.

  • Bi-Polar as they flit between being slightly cheaper that their most expensive competition, to undercutting the cheapest offer from the biggest MNO in an instant. 
  • Frankenstein as the first marketing and even product set, is usually stolen from every MVNO that has ever existed in 5 countries, over 3 MVNO models in 6 different niches... and the result is, well usually awful! 
The way MVNOs market is by sending bespoke offers to their customers that will never be on a slide, as they arrive via SMS and the offer is only available to those customers, or other customers of the MVNO. To do this you need ready and quick access to data:

  • who do they call? 
  • what time do they call?
  • what handsets IMEI/MSISDN database are they using?
  • what locations are calling from frequenting?
  • what locations are they running out of credit?
  • where are they topping up?
  • how much and how often are they topping up?
  • what top-up channels are they using?
  • what type of data are they using, where and how fast?
All this is in the CDRs, GGSN and HLR, and needs to be available to the OCS needs to be fully integrated with this, as well as a tool to bulk SMS, and report who has what SMS, as while you will be marketing daily, its not good to market the same customers more than a few times per month for obvious reasons.
"If you cannot name 3 MVNOs from your territory that do this well, its most likely that they do not have access to this data, and if you do not, then you will not be a leader either" 
MVNOs are a Sales and Marketing organisation. The best ones have great BI and change pricing flexibility 
OK I jumped a few slides here on refining product and marketing, however this slide leads on well from above as well as: When an MVNO examines its subscriber acquisition costs (SAC), ARPU and Churn, it very quickly sees that MVNO led customer to customer and MVNO to customer led marketing obtain customers cheapest and keep them the longest. It is important to have a mix of SAC but these need to be kept down to grow successfully as an MVNO.
Choose and adapt from successful MVNOs, but avoid "Bi-Polar / Frankenstein" campaigns! 
Draw on what has worked and what is (see previous slide) is in budget. EE recently did a huge above the line campaign with Kevin Bacon, which is beyond any MVNO marketing budget, however its OM4G and 4GEE twitter coverage was cheap and genius and well within MVNO budgets.
Back to the three MVNOs from the activity above, go through these points.
In my workshop I then went through the above key points for three MVNOs I think market themselves well. My examples were deliberately different: Lyca Mobile, Virgin Mobile and Tesco Mobile; the key being that while they are very different MVNOs in very different segments, theirs USPs focus on points that the MNO and other MVNOS find hard to copy, they deliver what they promise without extensive T&Cs, and typically their most successful packages are no where near as cheap, nor anywhere near as expensive, as the cheapest / most expensive MNO offerings of the "Bi-Polar" approach to pricing.
My most copied slide! The MVNO must evolve its marketing to launch successfully and then grow
Which brings me to the last slide of the Marketing section, and my most copied slide. Every MVNO that has been successful has evolved through these stages, many that have failed have failed to adapt, either because.

  • They just did not evolve. Some ethnic MVNOs started with a multi-language USP, but as customers learn their host country language the product needs to evolve, or the countries expand.
  • They could not evolve technically as they were tied too much into their host
  • They could not evolve operationally - if the reporting is manual spreadsheets... you are not going to market successfully beyond early adopters.
When launching an MVNO you can get by with the basic tools that an MVNE and the host MNO gives you, as long as this includes: CDRs, IMEI, HLR location of LUs, all transactions, collated top-up info, SMS marketing tools and reports, reconciliation, GGSN logs, etc. These need to be accompanied with the ability to update data settings OTA, edit the SPN OTA, change tariffs real-time, etc, etc. and usually require another 10-20 services to be sourced and integrated to move beyond early adopters.  These are the keys missing from failed MVNOs or underperforming MVNOs.

I hope you find these slides useful and informative. Feel free to paste these slides into your own presentations, as many do, but of course please do the basic common courtesy of quoting where the content is from if you do change the appearance and/or remove any logos, watermarks, etc.

Friday 26 September 2014

Driving effective data revenue and reducing cost to serve MVNO

Well it has been a while since my last post, but I have been in the thick of working with major FSTE, NASDAQ, AIM and other quoted MVNOs and would be MVNOs and its difficult to blog when you are dealing with sensitive work, especially when a person on a team from another consultancy who shall remain nameless spreads rumours that you may have published the MVNO marketing strategy on your blog but failed to notice the post was from 2 years previous to even working with them :). Well done that man!

So, this post is about two critical points of being a successful MVNO and how this can be easily achieved in today's major trend for growth, and to publish some slides on the point that I presented back at the MVNO Dynamics London event earlier this year, those of you who attended will already have this presentation and heard it live.
Presentation originally done at
We have been building MVNOs for longer than anybody out there and seen all the trends, from international voice to SMS and now data is taking another surge. With each new surge comes problems, as wholesale generally follows a second wave on raw material costs (in this case wholesale data rates) and has to deal with "me too" and "mass market" customer issues without usually having thousands of staff and retail stores to absorb (and hide the true cost) to serve this mass market.
Virtuser has been doing MVNOs longer than anybody; we have seen all the trends come and grow! (go) 
Just a brief history of how we got here. We do not just do MVNOs, we have also done a lot of mobile apps and mobile app stores for the likes of Nokia, Vodafone, Telefonica and more. We enable the world's first OTA distribution for specific handsets, the worlds first mass distributed apps and the worlds first Cloud based service sending our now competitors' OTA settings. We started doing our own settings when our clients were disappointed at the poor (30% to 40%) success rate of the standard OTA settings profile. We are still seeing this today where static OMA Alliance settings are sent.
We understand the full 360 of mobile data and MVNOs better than anybody; and this shows in the quality of our OTA
There are two critical points therefore in enabling data revenues - First you need to get the right settings easily on the handset, MVNO APNs do not generally come on a handset, as MVNOs do not buy nor subsidise handsets on mass, so you are stuck with OTA or "over the Air" configurations, but not all settings are created equal. In the old days they were all send by SMS, but handset fragmentation has meant that there are multiple ways depending on the device OS
Static OMA Alliance settings are only 40% to 50% effective, and create a huge cost to serve burden. the average MVNO customer care call for MVNOs in the UK is around £4!
Furthermore this is compounded by different versions of OS having different OTA experiences. Some of our competitors started using mobile apps to configure phones back in 2010 in the aftermath of the "app boom". however our work with mobile apps and mobile apps stores had taught us a few things the main one being that while mobile apps maybe mainstream, a very large proportion of smartphone users still get someone else to load and install apps for them, or do not download them at all.
The user experience of a previous client using standard OMA alliance static settings
Even if you do stick to standard SMS, you should never use a commercial SMS gateway, but if you do go for high quality over costs and do a huge amount of testing, as we can see here the character set was causing the OTA link to fail, after the customer had been forced onto a computer, to enter the phone number, incur and SMS, then for nothing... what will this customer do? call you call centre and cost you probably more than you earn in profit from them in 1 to 2 months!
Having worked extensively on MNO and MVNO data revenue driving initiatives we understand the importance of 3 clicks!
You should never have a data enabling service that means the experience varies significantly from device to device, nor any experience that takes more than 3 clicks if you want it to drive mass adoption. So this is what Virtuser has done with the OTA APN settings, and created the most advanced APN data settings available.
The same client user experience on Virtuser; the real cost is only found in the end result!
Its simple, keep it simple, but most off all keep the experience as uniform as possible across devices, as a) people change handsets or have multiple handsets on different OS and b) they usually ask someone for help, who may well have a different OS.
The results of good user Experience, uniform service, and bespoke settings for thousands of handset/OS combinations built on the fly (the most advanced OTA APN platform) is significantly increased data revenues and an affordable cost to serve.
If you serve dynamic settings, in an automated but controlled fashon, with a uniform and well thought out manner then the benefits are huge and data traffic is presently in the 100s of Mb per user per month in MVNOs across the developed world, so what are you waiting for???

We have been a trusted advisor and service provider of the most successful MVNOs, MVNEs, MVNAs and MNOs for over 13 years, and stepped in to do this presentation at the last moment when the planned speaker let Ramy and MVNO dynamics down at the last moment. Obviously Ramy knew who to call; if you want the best data settings, are thinking of becoming an MVNO or just want the presentation in full (I have cut our some operational slides) then you can see more on the Virtuser OTA APN Settings page or contact me to discuss either via this page (middle right of this page) or via the Virtuser Mobile OTA APN website.

Wednesday 30 January 2013

why Europe's MVNOs still sing

Europe's MVNOs still singing 7 years on...

Six years on from the original article, and 13 years on from the first European MVNO in the UK, the European market is still singing, fortunately!

MVNO market share Europe

Why is this? Well partly as written in my Future MVNO article of a couple of weeks back; Europe is on the higher side of the highest MVNO % of MVNO market share, and that's a big deal. So if one MVNO in one country can represent as much as all the MVNOs in other countries, there is still a long way to go, and every indication that wholesale can represent much higher market share in mobile as it does in other markets. 
W. Europe is at the higher end of high MVNO market share

While Europe and the US are far ahead of the rest of the world, Europe is far ahead of that, with the UK at 14% MVNO market share, and countries such as Denmark, with Telmore MVNO at 800,000 customers in Denmark... and only 3 people live in Denmark! (I lie, its actually 5.5M...) which makes high double digit MVNO market share for just its biggest MVNO!

Why European MVNOs sing

So what contributes to the European MVNO flurry? Well, in order:


The GSM network gives Europe a strong advantage, whereas the first MVNOs in the US were using CDMA, CDMAs have lower yield and lower margin and the switch of a handset is a churn catalyst in CDMA, whereas in GSM MVNOs changing handsets is just a churn opportunity

MVNOs and handset

The buoyant handset market has contributed heavily, in countries like the UK sponsored by MNOs, in countries like Italy funded entirely by the user, and in the UK the iPhone phenomenon saw premium rates. When the iPhone launched in the US it was yours unlimited for $22 per month, in Europe the compulsory extra unlimited data bundle for iPhones was not far from that alone!

MNO MVNO dynamic

The MNOs paid quite a lot for 3G licences, and needed to amortise this investment - wholesale has become the MNO cash cow in Europe, and the above factors allow this to be quite a milk machine!

European MVNO market

The European MVNO market is diverse: despite the "common market" coming in to place an embarrassing amount of time ago, Europe is very, very far from a "common market" - Roaming is still a chore, and 9% of Europeans live in another member state, yes 9%: the niche is the MVNOs friend and Europe is full of niche markets

Original why Europe's MVNOs still sing Article (2007)

RE: Why Europe's Mobile Start-ups Sing

Different markets require different business and marketing models
I was sent an article from Business Week with the above title via email by a client; one of those nice comforting articles that make you feel you have made the right choice by doing many of the things that are in the article as they preach is right, with the added smugness of feeling you are doing something a little extra they have not twigged yet!
They are right in that one MVNO model is the low cost route, however there are more important keys I have seen, from behind the scenes, that have made or broke MVNOs in Europe:
  • One is a good network deal: Never underestimate the value of good advice before embarking upon something as hard to chew as an MVNO. There is no point keeping other costs low, if your single most important cost base is inflexible. These situations remind me of heavy industries with inflexible human resource, only instead of being an inevitable legacy issue, it is more a best avoided product of "staff from legacy networks" issue, which brings me to the next point;
  • One's thinking behind an MVNO has to change, it is not a mini Mobile Network: It has to be approached carefully, and its business model needs to be audited by all those involved.
And this is where the otherwise spot on article loses the thread: it comes to the opinion that the only MVNO model is "no frill" and that the US MVNOs are missing this entirely. Both of these are wrong in my opinion:
  • Firstly, "no frills" is not the only MVNO model for Europe; it is just the only one that has managed to master the two points above: thinking differently and keeping costs low. However, there have been casualties, both of which had the "no frills" model that the article preaches, but made both of the grave errors above.
  • Secondly, "no frills", like many European models, is not a model for the US; just look at the all popular iPhone as an example: In the US, AT&T are selling the iPhone for as little as $59 per month. For that you get the all important iPhone, unlimited data, 5000 off-peak minutes, 200 SMS and 450 inclusive minutes... As the iPhone launches in Europe, and more specifically the UK, I very much doubt it will be had for £25 per month, let alone with unlimited data (although on 2.5G only, "unlimited" is not that much!). Where is this going? In the US, mobile, like most consumer goods, is already "no frills" in price, so MVNOs in the US have to compete on other VAS, like the examples of Healthcare in my now ageing but once best selling Next Gen MVNO report... and for those of you thinking this is a plug, its not, its worse; its a "I told you so" ;-)!.
The real MVNO models are yet to come, and while in Europe they will definitely have to be competitive on price, in both the US and in Europe, and the Rest of the World, customers buy, recommend and repeat purchase on many things above price, and I would suggest even the successful "no frills" MVNOs, when you scratch below the surface, have succeeded on qualities offered to their customers beyond price.

posted by Christian Borrman 11:26am 25/09/07

Sunday 20 January 2013

is there still value in MVNOs?

Original article

Is there value in MVNOs?

I have received an email from Pyramid with this title. It is amazing, two year's after publishing "next generation MVNOs" that Pyramid finally ask if there is still value in the last generation MVNO... Well no; there was no value in them anymore in 2004 when I began writing the report, nor was there in 2005 when it was published, and there is less still today. Today's MVNO is a much leaner operation that its forerunners like Virgin. As successful as Virgin was, it was created in the late 90's when spending $20Bn on a 3G network weemed like a good idea. Today's MVNO should have now got down to a T the ideas I put forward in 2005, and the key to a successful MVNO or Mobile Virtual Network in 2007 and 2008 will be:
  • Handing over "legacy" cost bases to the host MNO or even the handset manufacturer. MNOs handle huge risk every month: every month the UK MNOs and even handset sellers put forward their forecasts for sales. To give an idea, Nokia UK typically sell 500,000 handsets every month in the UK, their best month was 2 million handsets... so even a few hundred thousand handsets up or down on a mobile network operator's book, or even a large manufacturer like Nokia, well is not a huge issue. However, put this discrepancy into every MVNO business plan I have seen, and I have seen most that have passed the UK MNO, consultancy or investment market, and the business model runs into problems. The MVNO opportunity today lies clearly in new markets, lots of niche markets the MNO and even handset manufacturer cannot / do not directly capture or target. If they want these markets, they can either sponsor a music festival or two at the cost of a few million, or they could spend the same or less managing handsets for niche MVNOs with direct sales as a result.
  • Niche, Niche and Niche; The MNO brand will only stretch so far, niche MVNOs can capture new markets or keep existing users.
  • MVNA: the MVNE will not punt on small players, MNOs will not punt on anyone but "the next Virgin", however there are millions of subscribers in the UK alone who have very strong ties with major brands, events, social movements, clubs and other would be MVNOs, who 10,000 subscribers here, 30,000 subscribers there, add up to 100,000s of subs put together. They may all be different, but they do have a few things in common: simpler tariffs, smaller handset selection, more focussed customer care. The MVNA is just around the corner.
  • Cost reduction; gone are the days of warehousing branded phones with custom software; the clever MVNO will "brand" the handset Over the Air (OTA), either with an On Device Portal or an OTA software upgrade
DIY MVNO. US company Sonopia are offering user the ability to set up an MVNO in 10 minutes and receive 5% of the revenue. While this article, reported on The Register suggests that this model may not be popular in Europe, where the handset, then the tariffs, not content, which I agree with, it does propose an interesting trend: That MVNOs should compete on something other than on handset or tariff to e competitive, and that network generated income should be a revenue stream, not the sole source of revenue for the MVNO business model. Having written, contributed to, carried out due diligence on many MVNO business models over the last 8 years, and in light of the failures of EasyMobile, it is clear to me that the post Virgin and Tesco MVNOs will need to leverage their brand, content and or other much more effectively, to counter the fact that economies of scale in this market are a thing of the past. Realistically, going forward MVNO need to base their business model on breaking even on 10,000s of customers, not the millions or 100,000s that the many jumping late on the MVNO bandwagon seem to band around. Competing on handset and tariff is the domain of the MNO, not the MVNO. Added to this, it will not be long before people realise how expensive network subsidised phones actually turn out to be and look to source their phone separately, to then focus on a "network" that offers them the content, services, or simply just the bitpipe for voice and text that the individual wants.

originally posted by Christian Borrman 06:50am 05/04/07

Monday 14 January 2013

failed MVNOs, MVNO myths, again, updated article

I thought I would update one of the most popular articles on my MVNO blog for a few years, now that MVNOs seem to be picking up again. The issues are the same, however with a bit more detail they are split out into 6 rather the 3 main points:

Not defining the MVNO product

Not defining the product properly is a key dependency of everything below: what are you selling, to whom, in what package, in which channels; moreover: Why can you do this cheaper than the MVNO and why can you keep this customer longer. So many people lose site of the fact that the bread and butter of MVNOs is acquiring the customer cheaper and keeping them for longer. once you have defined the product, you can do a business model that does not just read like "this guy has bought one of those MVNO business models off the internet and so goes straight to the bottom of our list". A well defined product will need and make way for a well defined word document defining everything, as well as an excel that is somewhere close to real, as much as possible obviously! This is critical to point 2) below as well, the MNO / MVNO relationship/agreement.

MNO MVNO relationship / agreement

Once you have easily got the MNOs attention by knowing point 1 above, defining the product, the negotiations will go a lot easier as you can focus on getting the right deal. There are so many people out there who are either a) so desperate to keep in favour with their old MNO employers/partners/etc. or b) the rogue  ex FD or wide boy who just negotiates and renegotiate every point that is in front of him until there is no goodwill left in the relationship and without any regard for whether this is a point that means £50,000 of revenue over 5 years or £50M...

The MNO / MVNO relationship is key, as when you launch, you will have some big competition, a big brother for the new kid in the playground is more useful that most people think... you do not want to be that kid whose big brother would happily see his annoying little brother's head flushed down the toilet...

You will also not get the agreement right at first: you will need some help to renegotiate after launch, if you have already negotiated this to death... this does not mean get a crap deal out of the MNO, this means get the right deal for the right model at the right time with the right MNO. If you have done point 1) above properly, you will have at least two MNOs to chose from and chose for more than just base rates! Think: Q: what would happen if I came to the MNO with....  Q: Can I work with these guys or will I be hating their guts at every meeting...

Choosing the wrong MVNO model / MVNE provider

I have put this here, even though it is part of point one, defining your product, as, your offers available may change your model choice during phase 2, the MNO/MVNO relationship. Having said that, do not let an MNO persuade you into a model that you believe is wrong just because they have a spare slot for that model... this is not just full, light or other MVNO: it goes as far as saying: do I need to be an MVNO at all or can I licence my "product" to the MNO wholesale team??? or even, in the case of the failed Disney Mobile, could this be done better via a content deal... Think about what Apple and blackberry did in certain markets. MNOs see so many MVNOs, and the wholesale team are bored silly of doing thee same old, stand out and ask for what you need, what you want from having done the points above, not just what is on the shelf.

MNO Legacy in MVNOs

never do anything just because it was the case in the last MNO, or MVNO for that matter. EasyMobile's CEO came straight from one of the greatest MVNO successes of all time: Telmore, but that was no guarantee for success. Online has gone from being sub 1% of sales in the already internet commerce friendly years of 2006 to now being serious double figures, SIM free sales are soaring, multi SIM ownership is increasing...

MVNO Execution. 

You have managed to get here, the "easy" part of your journey is over! You now have to sell! I have done due diligence on a few MVNOs and found all sorts of horrors that scuppered a deal:

  • SIMs in channels that cannot be recovered: the relationship soured, the model was broken, the systems were terrible, people got carried away, the MVNO gave thee SIM away for free... at the end of thee day, the MVNO lives by acquiring the customer cheaper and keeping them longer; wasted SIMs not only ruin/dilute/fudge the real figure, they can cost £100,000 or even £ millions and moreover destroy your brand. Think, if you have someone's SIM in your drawer for a year without putting it in a phone - what do you think of that brand? 
  • Partners / agreements that have to be used because you are tied into that provider
  • Scale/flexibility: you will most likely be much more successful than you anticipated if you got this far, however it is extremely unlikely it will be in the way you planned: do you get the stats, revise the marketing, reconcile the channels, reroute the stock, reorder the stock, etc. to ride that wave? Most MVNOs find out too late, have thee SIMs in the wrong channels (or not at all!) still spend marketing where its not working, etc...
  • start simple, easy to monitor, low/no fraud risk, low maintenance... drive that early advantage

MVNO Lifecyle

Read your technology books, or at least just Pip Coburn's change function; and remember - the needs of the people who buy your first product, to the ones who buy later to the mass market (if you are lucky) are all different, therefore your product will change, your marketing will change, your channels will change... therefore do not get obsessed with having the right handset or bundle to get X customer - your first customers will buy simple! you can add bundles for the me-too market!

Remember: acquire cheaper, keep for longer - with everything you do in MVNO!

The key MVNO myths:

  • MVNOs cost $50Million - no they don't; Virgin did, most was mass market ATL marketing, both the mass market MVNO (5% of country subs) and big ATL budget days are over, at least in technology
  • MVNOs need a handset - no they don't... do not have the time or space here....
  • Pre-pay is nasty Post pay is better- no it is not, Virgin mobile got to ma good few million customers with pre-pay and auto top up.
  • I cannot compete without a bundle - yes you can, MVNOs have sold per minute and per text in a bundle fuelled market, data will go the same way, you can get 40% of your customers and your first customers without a bundle: bad staff blame their tools!
Did I reiterate: acquire cheaper, keep for longer? :)

Original "Failed MVNO" article 2007 -:

Failed MVNOs
It is not hard to see why. In 2005 I was lured to head up the mobile arm of £12m start-up icom, which included a youth MVNO, however, the most common expression I would hear to my repeated youth MVNO business models and plans from the billionaire funder and financier in board meetings was “Bollocks!”. The only thing more annoying than being constantly black-balled, was of course, the horrible realisation that he was right. (Actually at the time his new bean counter who would just nod and agree with him but knew nothing and cared less about the whole idea was even more annoying... we called him “the nodding donkey”).
Youth MVNOs, as they have been rolled out, and as I would have rolled out, and as the mobile operators, handset manufacturers and marketers would have backed me up, do not work; the technical term for which is apparently “bollocks!”. The problem is that they are devised by people like ourselves, who are advanced users, for what we see as even more advanced users, which they are, which also means they know how to, and have the time to obtain this advanced usage we pay for, usually for free. Their spend is neither predictable nor regular. There are many youths with surprisingly high disposable income, however those £500 per month in the UK will sometimes have £50 to £500 spent on mobile one month, then just £5 the next when they renew their wardrobe or even less for 3 months when they are saving for a new scooter. Today’s 50mb on myspace data is nothing by the time you have launched a myspace service on your MVNO, because by then they will have moved on to face book, and so on.
Dot mobile going bust was no surprise really, as neither was...
Extreme mobile never got off the ground for the same reasons, i remember doing the due diligence for a VC looking to fund extreme; there was no fault in Damien Brady’s pitch, it was one of the best I have ever seen, its just the youth model is flawed.
While the youth market is seen as premium, as they have huge disposable income and are advanced users, as we can see in the mobile youth report, however, it is divided among too many pulls, with too many seasonal, weekly, fad based and just plain inexplicable variances upon which to base a x month business model. The only people who could make a go of this are the likes of Lebara and other low cost MVNOs that presently focus on communities, with a youth brand, they have the lean, mean base model to be able to withstand the ups and downs, they just do not have the brand... but that is where they are strong, as a branded youth MVNO is commercial suicide. You need a vanilla MVNO that lets them use whatever brand or service takes their fancy at the time.
It will be interesting, as there is definitely opportunity, and it will be interesting to see Blyks rise or fall, as a similar problem arises in terms of planning ads and campaigns that are devices months or years in advance, while making them relevant to a constantly shifting market. What can save the likes of Blyk, is the booming space in mobile web advertising, rather than the planned-for direct marketing.
But good luck to the bunch of thirty and forty-something, even twenty-somethings who think they can make a go of selling predictably or reliably to 14-24 year olds. I spent two years of my career doing it, did endless user experience sessions just for the mobile festival guides, let alone a mobile service, and learned in the process to be prepared, be surprised, and move quickly.
posted by Christian Borrman 21:36pm 19/11/06, updated 06:26 05/07/08
The most common failed MVNOs are those we never got to hear about! Many underestimate the undertaking that is an MVNO and how long it takes to get the model right, and the MVNO never makes it to market. Once launched, the second most common failures, in my opinion and 7 years experience in MVNOs, are caused by one of three things:
1) "Legacy" elements of the MNO excesses and MVNO forerunners; like expensive tariffs, cost based propositions, large cost bases like subsidies, flashing handsets on a small scale, or MVNOs based on the brand propositions of the past, like the Virgin Model of obtaining millions of customers when those days have well and truly passed, etc. etc. Many of these have been contributing factors to the recent demise of Disney Mobile UKESPN Mobile in the US and most recently Easy Mobile in the UK.
2) Failure to business model properly and negotiate terms that are based on the business model's ability rather than "instinct" or just trying to get the best deal out of the operator without knowing why or being honest with the host MNO.
3) Flexibility. Take three examples: 1) Virgin mobile business modelled to have 200,000 customers, by which time they had 2 million. Three planned to have 1 million users, by which time they had a few tens of thousands. If you were a betting person, you would have lost money on these numbers for sure! There have been too many MVNO models that lose money as they could not grow quickly enough and continued with MNO penalties, or they could not scale their funding or supply channel quickly enough to handle handset subsidies and shipment... Many of these are just outcomes of points 1) and 2) above.
For more information on why MVNOs fail and succeed, see Latest article RE: Why Europe's MVNO Sing