MVNO Conference 2013 Rome LTE MVNO opportunity

I though I would share my slide and thoughts on LTE and the MVNO, having written many of the requirements, negotiated a major full MVNO with LTE and now building the full LTE MVNO, here in the UK for yet another FTSE 100 company entering mobile.

The Opportiunities for LTE in MVNO and LTE wholesale are huge

I feel in a strong position to talk about the opportunity because I have negotiated a lot of MVNO agreements over the last 10 years across mostly Europe, which has seen the advent of 2G MVNO and 3G MVNO and its contractual, organisational and other issues. Also because at Virtuser we run a lot of value added services for MVNOs, like top-up over SMS and OTA data settings for MVNOs so we see what handsets are being used, what data propositions are being used and other first hand experience of not just walking the talk, but walking the walk, to use the consulting analogy (consultants are often accused of only being able to talk the talk, or at most talk the walk :))

In assessing the LTE MVNO opportunity, we need to look at the facts, not 3G+

Its important that we look at the facts when assessing the LTE opportunity and not make the 3G mistakes, not only on the commercial proposition side, but also from a network and business side. That is: its clear that 4G handsets are slower in uptake than 3G, and that so far this service, as such, commands a premium over 3G. We also know that data currently represents high double digits percentages of network running costs (87% in the case of a major MNO in the UK) but no where near these levels of revenues. We also know that while mobile data costs in the region of 5X the cost to provision, it does not command a yield price 5X that of fixed broadband data due to strong competition on the MNO retail market... Wholesale therefore is a significant opportunity for MNOs and MVNOs to charge the higher yields and returns to MNOs and MVNOs alike in this space. This will require the MNOs, and their notorious contracts to adapt and enable all new MVNOs with "4G ready" status.

Please can we not see MVNOs still launching with 3G SIM cards 7 years from now like with 3G

 I was still negotiating 2G SIM card deals for MVNOs in 2007, 7 years after 3G! All new MVNOs should be 4G ready MVNO or LTE ready MVNOs, however you wish to call this. This means 4G MVNO SIMs, but also 4G LTE MVNO on the MNO roadmap, in the commercial contracts and support services.

4G has had a lot of marketing spend and will be big, but a 4G MVNO campaign does not need  huge spend

A lot of marketing money has been spent on 4G and it will be big, but that does not mean 4G MVNO marketing needs to be big. Sure, EE has spent tens of millions, if not hundreds, on Kevin Bacon on prime TV ATL campaign... but they also launched #OM4G around the social networks and hit exactly the same audience for the cost of a couple of your marketing execs and some creative freedom free of corporate risk constraints (unlikely in an MNO :)) Data MVNOs like Bliep* launched and grew almost entirely on Twitter. Cheap marketing and a niche = low SAC, the mainstay of wholesale. add the fact that MVNOs are generally attracting a higher yield for their data and we have an ideal scenario for 4G to pull us out of the 3G hell we have, where heavy competition and unlimited packages mean 5% of the users are using 95% of the data and nobody can get a fast connection when they need it, reliably at least.

Clever Twitter and social marketing by MVNOs that is too risky for MNOs can hit at core 4G data market with low SAC

So the dawn of clever MVNO marketing is already here, and shifting the focus of MVNO marketing spend from being like MNO spend (mainly ATL with some dabbling elsewhere) to very experimental, experiential and social marketing... exactly what internet savvy 4G target market consumes. So no need for an overcomplicated six degrees of separation to attract a market and generation who are more 4G aspirational than 4G ready.

So you got past 4G and LTE contractual, MNO roadmap and other issues: is your MVNO platforms operationally ready?

Many MVNOs today have 3G, however nobody uses it as they are obsessed with competing with MNO bundles. The fact is that 50% of UK smartfone users use less than 100mb of data, and the rest use around 200mb. That means that by paying as much as 5p to 10p per megabyte on an MVNO, these users will be better off than getting an unlimited MNO tariff. What is more, the host MNO is better off, as retail yields are around ten times less than this. The MVNO is better off, as these data revenues are what shifts MVNOs form what I call a "£10 minus ARPU MVNO" to a "£10 plus ARPU MVNO".

By enabling the most advanced OTA MVNO data settings on the market we have seen huge growth in data usage in even markets which the MVNO would never assume they could generate usage.

The key issues around negotiating LTE MVNO and getting an MVNO 4G ready

The back-end is still critical, even the slickest MVNO architecture from tier 1 providers does not come with the back-end to enable MVNO friendly OTA and APN data settings, some of them incur up to 50% of customer care calls, which at an average of around £4.50 cost to an MVNO of a customer care call today, can easily wipe out the increased ARPU from data, and even all the profit from a user. Finally, the proposition needs to work. From running the SMS tariff top-ups form MVNOs we have great insight to the propositions MVNO customers actually buy, and they are very different from what most MNO propositions are, and a world away from the tizzy that MVNO management and proposition consultants can whip themselves into.

Every informative case study should end with a shameless plug for our services Virtuser MVNO consultancy :)

personal or celebrity MVNO Jennifer Lopez mobile mvno marketing

One of my more popular posts of just over a year ago was around the plans for Samuel Eto'o to Launch an MVNO in his native Cameroon, and it was for good reason: there is a lot of mileage in the personal mvno, or as it is now becoming more commonly referenced as celebrity MVNO.

So along comes Jennifer Lopez and announces an Hispanic MVNO or strategic alliance with Verizon to sell phones. What is more interesting about the JLO mobile deal however are two things: firstly that there have already been some Hispanic MVNO plays in the US market with Movida, Tuyo and Dexa among others, and secondly that it is in a market and host operator that has done this kind of thing before... yes, I am saying it will take a little longer to launch (the first) MVNO in Cameroon than an existing model, in an established market with a celebrity twist.

MVNOs need more than just a brand now, they need a brand that plays in many spaces and moves forward

This Celebrity twist may be the key, as so far the Hispanic MVNOs have had initial success, but ultimately have failed, and this is due to a mixture of two things:

1. The customer outgrowing the brand: most Ethnic MVNOs sell on the USP of having a native language IVR, something which a customer can quickly outgrow
2. Most MVNOs are very good at getting the first customers on board, the early adopter, however those that fail typically do so due to not evolving the product marketing to the second wave of "me-too" and mass market

So how can someone like JLO help? well it depends on how much she is involved, but on a simplistic level the customer is less likely to outgrow the product when they ground themselves in their environment.

Secondly, if someone like Jennifer Lopez is involved in the product cycle, even if at a very high level like the Will.I.am Intel innovation can really help to keep the customer engaged and the product evolved for longer.

You only have to Google "Jennifer Lopez Enterprises" to uncover companies such as BioWE, Nuyorican productions (nice!) and more, all this can add a much needed injection of ongoing product development and innovation to a mobile model, both the MNO and MVNOs that is in need of a different approach to product development and innovation that the new wave of celebrity or personal MVNO could add.

The celebrity in technology is not new, Clive Sinclair was the centre of the ZX spectrum,

The entrepreneur behind the spectrum was key, tho not enough for his next venture, the C5

Richard Branson was as bigger part of the value of Virgin Mobile as the trade mark itself, even beyond its native brand strong-hold, the UK

Launch publicity like this costs millions... or you can hand a celebrity / personality behind the brand from a rope!

Steve Jobs was the centre of Apple's ability to enter the mobile space that everybody, and it is hard to believe, everybody thought they would fail at. Indeed the then Nokia CEO famously expressed; "if I launched a 2G phone with those specs..." (the first iPhones were technically behind, but the OS and eco system more advanced, driven by vision, not typical technology product development.

Steve Jobs, and his vision of UX and eco system over hardware, were key to the success of  the iPhone

and many of the Victorian industrial revolutionists were a key part of the evolution of the brand and products and innovations. the Rocket, is not known as the rocket, but Stephenson's Rocket

Rocket? ah... you mean Stephenson's rocket!

The ideal is to return to business to attract the right people, which will happen, but in today's safe, grey and boring corporate world were management salaries are lagging, the talent is elsewhere and in entrepreneurial roles, and recruiting celebrities and personalities to inject a bit of life into your technology product is no bad thing.

Nokia MVNO

Nokia MVNO

The Nokia MVNO rumour first surfaced in 2008... remember this was way before Microsoft, iPhone had only just launched a phone with a proper radio in it (iPhone 3G) and Android was on version Cupcake (1.5) and Donut (1.6) with the main device being one from HTC that had spoilers on it!

Since then a lot has changed :) however Microsoft devices appear to have their market with 4G? The article which caught my eye was this one, saying Verizon may get a high end Lumia (yes, another rumour .. I am sensing a trend too :)). But bear with me;

Could the service retail and even MVNO model be the WP8 market sweetspot?

...as commented here in MVNOs from a customer perspective there is a  definite shift to where mass market that want an unlimited bundle and untamed device go to the main network operator. MVNOs compete more effectively on their own terms, creating niches... which, forgive me if I am wrong, but appears to be where maybe WP8 can be very strong, especially an LTE 4G MVNO?

Similarly, there are a lot of Android handsets out there that are ideally suited to the MVNO, for example the keyboarded smartphones and moreover the Samsung Duos series, as much of the MVNO growth in recent years has been via SIM duplication, not SIM substitution, at least in the US and Western Europe with high % MVNO market share... and who else does mass market dual SIM devices... ah yes which brings me full circle to dual SIM Nokias... :)

Original Nokia MVNO Article (2008)

Nokia Hardware MVNO

Reportedly Nokia is planning a Hardware MVNO in Japan, which would push the OVI portal services within this market. As correctly pointed out in this article, by Rethink wireless that Nokia has found it difficult to enter the Japanese market due to the operators' insistence on using i-mode type services, these services will not necessarily be a barrier to the success of a hardware andon device portal MVNO.

In essence the i-mode model is an early learner mobile portal, not dissimilar to the AOL online model, where people are provided a safe environment, which also becomes a familiar environment, due to mass adoption, however it is one people eventually grow out of. The evidence and historical evidence of this can be found in the two following lessons:

Firstly, if we look at the rise and fall of AOL as a portal to the fixed line, it rose and fell with dial-up. AOL provided a cost efficient an effective way to get on-line in the pre-broadband stage, when what is effectively a walled garden worked well. As the beginnings of what we now call web 2.0 came along as well as broadband, we had to climb out of our analogue shell and into the digital world, helped along by the magic of google. part of the pain of adoption that had to be overcome was moving over to the monthly line rental and learning what ADSL means and what an upstream and a downstream where...The mobile world has now catapulted itself into this mass market phase, from 2006 when we had 176 x 208 screens with tens of thousands of colours, operators would share with me how they struggled to get over 7 days per month WAP or mobile internet usage out of even ABC1 clients. In this space, i-mode wins, and the uptake of i-mode over WAP in Europe shows that, as does the uptake of AOL fuelled internet over that of the typically dial-up model in non AOL territories. In 2009, we have GPS enabled QVGA+ 3"+ screens with millions of colours and HSDPA and wi-fi, and the world is a very different place. OVI lets you upload your photos to flicker and VOX, video call, IM chat and everything you once dreamt of doing on a laptop but practicality never allowed, can now be done, and that is something that will be driven by an "open" Nokia approach, rather than the unspeakably annoying operator approach, whereby by Orange branded Nokia interrupts my second photo while I have to cancel it asking me if I wish to upload the first to my Orange album, even though I have refused every attempt it has tried for me to set-up and Orange album... (after having carried out what seems like decades of user testing for Nokia, I can only imagine Nokia's horror when operators ask for features like this) and why would i want to share my items with just other orange users, presumably in the UK, when my network has outgrown this model and Vox and Flickr let me share with the world, even after I have left Orange.

Secondly, device connectivity has moved beyond the control of the mobile operator, and with it the user has outgrown the heavily modified handset. People now want an iPhone, or an N96 or a C905, and they do not want it to have been messed around with too much, like the "upload this photo to Orange" intrusion, I also want to update my software when Nokia have made it available, not when the operator has had time to play with it and tweak it: While operators like Vodafone in the UK are very good at releasing updates for their variants, my N82 on orange is still stuck on its original build 10.x where the internet radio still does not work and a handful of other bugs are present, all of them removed on the build 12.x that everyone else is on. Then there is the connectivity, like with the online scenario: When we only had dial-up, we did not mind AOL commandeering our modem and stopping any other pesky diallers eating our money. however, in these days of multiconnectivity, we do not want AOL messing with our vodafone 3G connection or wi-fi hotspot connection. In the same way, we are tired of having an operator driven phone full of bookmarks that respond with "this service is only available via GPRS..." every time we are on wi-fi.

In short, the Japanese mobile internet is the most mature mobile internet market there is, and I would suggest they are ripe for a hardware MVNO, as the predicted 1 million iPhones by the end of 2008 suggests. It seems that here in Europe the market is headed the same way too. Twice now, the issue of debranding Nokia phones has come up in conversations. In both of them I mentally recorded what USP would trigger people's desire to change: 1) the phone as Nokia intended it? No; 2) having all the VoIP and other software your operator does not like? No 3) potentially having a more stable phone? No; 4) being able to access a full range of software from Nokia Beta labs and other software from the "download" section of the phone? done, yes please... what do I have to do to debrand my phone...

posted by Christian Borrman 19:26pm 24/11/08