White Paper. Five Essential Tips for Launching an MVNO. DIGITALK Mobile White Paper.

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1 White Paper Five Essential Tips for Launching an MVNO DIGITALK Mobile White Paper

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3 INTRODUCTION Entering the market as a Mobile Virtual Network Operator (MVNO) is a bold move, whether it is undertaken by an entrepreneur or a large corporation. The purpose of this short paper is to signpost the key stages and thought processes you should consider when developing your MVNO proposition, sourcing your host network and IT partners, and launching and trading your new venture. It will outline five key guidelines that could mean the difference between success and failure: 1. Place the customer at the heart of your proposition. 2. Build partnerships that are based on complementary strengths. 3. Choose a technology solution with an eye to the future. 4. Invest properly in planning the project. 5. Launch is the beginning of the journey, not the end of the project. So what exactly is an MVNO? While it may at first appear to be a simple question, the marketplace is littered with jargon, and multiple definitions. For the purposes of this paper an MVNO is described as: An organisation that sells mobile communications services under its own brand and maintains customer ownership, but uses another operator s radio spectrum and infrastructure to deliver those services. Consolidated mobile network operators (MNOs) need returns on their network investments and MVNOs can offer them privileged access to particular mobile opportunities. The crucial point here is that the MVNO ultimately owns the customer and is therefore responsible for all elements of the customer proposition, from pricing and billing to regulatory and legal responsibilities. Using this definition there are about 1,000 MVNOs trading and acquiring customers worldwide. The market has enjoyed significant growth, in both customer and revenue terms, over the last three years, with no signs of that growth abating. Mobile services have come to dominate national and international communications, with 7.5 billion SIM connections and 3.8 billion unique subscribers globally. Mobile has become critical not only to telecoms operators, but also to major brands and many other types of organisation. Today s high-speed data networks mean that mobile can now support voice, video, messaging, data, and content services. In turn, both opportunities and expectations are rising. Consolidated mobile network operators (MNOs) need returns on their network investments and MVNOs can offer them privileged access to particular mobile opportunities. Using their unique market insight and access, MVNOs can enhance customer value and create market advantage for both themselves and their MNO partners. In turn, today s MVNOs and MNO need a reliable, supportive and agile partner that can help them to take advantage of new market opportunities.

4 INTRODUCTION Distinct MVNO business models exist, including retail, brand, value, ethnic and niche, but regardless of the market proposition, all MVNOs need the right commercial and technical platform on which to succeed, backed by full support through launch, growth, retention and diversification. At DIGITALK we have significant experience and expertise in supporting MVNOs looking to launch or migrate services to a new MNO, and supporting MNOs that are looking fro new partners to support the launch of new, and the migration of existing, MVNOs on their network. For MVNOs we offer rapid service launch, proven reliability and scalability, and experience of maximising the customer experience and value proposition, available as a real-time charging option. For MNOs, we have significant experience in supporting multiple MVNO business models, again with the proven reliability and scalability that our customers demand. As well as offering a full mobile network core, we provide mobile service management, real-time charging, CRM, billing, and a value-added services platform with Web APIs for customer self-care or acquisition integration.

5 1. PUT THE CUSTOMER AT THE HEART OF YOUR PROPOSITION The first elements to get right are market positioning and customer proposition. For an MVNO to be successful in a market such as the UK, it needs to target a specific customer demographic or segment and, crucially, it needs to do this more effectively than the MNOs and other competitors. It is important to challenge yourself upfront by asking some difficult questions in order to ascertain whether an MVNO is the right vehicle for you to realise telecom revenues. First, does your brand have customer acceptance as a player in the mobile arena? What is it your customers love about your brand and how would this translate into a mobile proposition? Is it your everyday low prices, or your passion for quality? What has made your brand great? It s important to test whether this will translate well into the communications world, and whether consumers feel that you are a credible organisation to provide a mobile service. First, does your brand have customer acceptance as a player in the mobile arena? What is it your customers love about your brand and how would this translate into a mobile proposition? If you are a startup company, the process is likely to be even more challenging, as you must define what you want to stand for, and then build the brand around your value proposition. The second important early consideration is the distribution model. How effectively can you get your product to your customers? And, if you don t have your own distribution estate, can you afford a third party to distribute for you? A new MVNO must consider these points carefully to really understand where your strengths lie. Do you have access to a unique distribution channel? Do you have a strong brand affinity with a certain segment? Are you prepared to build a bespoke solution around your target customers? All of these elements will differentiate you from your competitors, and make you more appealing to potential MNO hosts. In essence: How do you get the product into your customers hands cost effectively? And, how do you ensure that they continue to use it? Once you have decided how you will differentiate, you then need to build the proposition with the customer at its heart. All elements of the customer experience, throughout the entire customer lifecycle, need to be considered, from building awareness to purchase, from purchase to welcome, from welcome to development, and then from retention to leaving experience. Do you have access to a unique distribution channel? Do you have a strong brand affinity with a certain segment? Are you prepared to build a bespoke solution around your target customers? All of these factors to be considered in detail, and then delivered to ensure that the experience exceeds the target customer s expectations. At this point you may identify areas in which you do not have the necessary skills or experience to deliver against your customer s expectations. If so, do not try to do everything, unless you already have the capability. Another vital element in starting your MVNO is therefore to identify any weak spots in your own expertise, and then choosing complementary partners to provide the missing links.

6 2. BUILD A PARTNERSHIP BASED ON COMPLEMENTARY STRENGTHS Once the customer proposition has been developed and tested, the second phase of development is to source the right partners. The crucial partnership to get right is the host MNO or an Enabler partner. This will require presenting your ideas and thoughts, based on the value proposition outlined above, to the MNO in order to convince them that your proposition is wellplanned and considered, is financially viable, and will deliver the incremental customers that the network seeks. Expect to be challenged and quizzed in-depth by the MNO or Enabler about your assumptions, target market, and forecasts for growth. Be wary if you are not. These are key factors in building a successful MVNO, so if you get an easy ride it may suggest that the MNO or Enabler is less interested in your success, and seeking to make money via set up and monthly fees, rather than the usage metrics that typically drive the revenues of the MVNO and the MNO. These discussions with a potential MNO or Enabler partner are also an opportunity to demonstrate what your own strengths are, while learning about the support the MNO or Enabler can provide in return in the areas in which you have less experience or expertise. Expect to be challenged and quizzed in-depth by the MNO or Enabler about your assumptions, target market, and forecasts for growth. Be wary if you are not. These are key factors in building a successful MVNO, so if you get an easy ride it may suggest that the MNO or Enabler is less interested in your success... At DIGITALK, we have the experience and specialist alliances to work with potential MVNOs to assist with areas in which they may not have all the relevant skills. This includes marketing, financial modelling, technical integration, customer management, revenue assurance and fraud. We have experience of enabling MNOs to rapidly launch their own, and third party, MVNOs, on both pre- and post-paid models. We can support large-scale migrations, and provide real-time service management, including products, pricing and promotions. Our expertise in business intelligence, predictive analytics and reporting, can help MVNOs to maximise the success of individual promotions and campaigns. Furthermore, DIGITALK has the expertise and experience to support multiple MVNO business models, including (but not limited to) budget, second brand, retail and ethnic. We support the full customer lifecycle, from acquisition through maintenance and loyalty, customer spend, and upgrade cycle, to termination. Our main objective is to help you maximise the entire customer experience and value proposition. We believe that in order to be successful ourselves, it is vital to provide our MVNO partners with the right tools and support they need to achieve their own success. So what is an Enabler? Put simply an Enabler is an intermediary between the MNO and the MVNO that facilitates simpler connectivity to the MNO. The Enabler supports integration with the MNO and will, in turn, enable multiple MVNOs via that single connection into the MNO. This has a number of advantages for both parties. DIGITALK has the expertise and experience to support multiple MVNO business models, including (but not limited to) budget, second brand, retail and ethnic. We support the full customer lifecycle, from acquisition through maintenance and loyalty, customer spend, and upgrade cycle, to termination. Typically MNOs will have many hundreds of internal projects underway at any given time and adding a new MVNO will have an opportunity cost, as resources are dedicated to integration with the MVNO. Direct MVNOs therefore typically need significant scale in order to feature on the MNO s roadmap. The commercial relationship may be between the MVNO and the MNO, with the Enabler working in support of the MNO. Alternatively, the Enabler may be a partner of the MVNO, forming part of the MVNO s proposal to the MNO.

7 Once an Enabler is in place there is no need for additional integration. This opens up new opportunities for young MVNOs who may have previously struggled to build a business case to justify direct integration with the MNO. Enablers can also offer additional capabilities in a far more bespoke offering than a large MNOs billing system can accommodate, further enhancing a segment-targeted proposition. The motivations of the Enabler should be the same as those of the MNO. Enablers should be invested in driving your success through customer growth and usage, and they should be able to do this by offering a selection of service-ready tools. The motivations of the Enabler should be the same as those of the MNO. Enablers should be invested in driving your success through customer growth and usage CHOOSE A PLATFORM PROVIDER WITH AN EYE TO THE FUTURE How do you find the best technology partner? The answer is actually quite simple. It is the technology partner that offers you the most flexible solution that enables you to deliver your customer proposition. The mobile market is ever changing and technology systems that are easily and cost effectively scaled and upgraded are crucial. A technology partner should therefore be able to demonstrate a roadmap for new capability deliveries being able to deliver on today s customer proposition is no longer enough. Solutions need to be future-proofed in such a fast-evolving market. Perform your own due diligence analyse your partner s business model and choose one that ensures your business is sustainable. Having no set up fees may get you to market cheaply and quickly, but if the trade- off is a significant per customer fee then this will impact the bottom line, and ultimately could jeopardise your success. Equally, ensure that the technical model is suited to your customer proposition. For example, a 4G bearer-only offer is great if you are planning to target customers with access to 4G handsets, but if you are chasing a low-cost, SIM-only proposition it may not be appropriate. Ensure that your partner does not operate a fire and forget model. You may not be an expert in every facet of making an MVNO successful, and as the business grows you will likely encounter unexpected issues and complications that were not apparent at the outset. Make sure that your chosen partner has a track record of on-going support and consultancy, allowing you to draw on their wealth of experience, and ensure your own long-term success....ensure that the technical model is suited to your customer proposition. For example, a 4G bearer-only offer is great if you are planning to target customers with access to 4G handsets, but if you are chasing a low-cost, SIM-only proposition it may not be appropriate. Most crucial of all is to find a partner that can demonstrate to you that they have a strong relationship with their host network and their current MVNO partners, and are able to demonstrate a clear understanding of both the technology they are offering, and the trends and pitfalls of the MVNO market. Seek out testimonials from existing MVNOs, and ask for access to the host MNO to establish the strength of the partnership and the strategic importance of MVNO revenues to the MNO.

8 Clearly there are some aspects that only the MNO can own for example, radio spectrum but there may be other elements that are available to partners. For example, CRM tools may be available from your Enabler, the MNO, or a variety of third party providers with which you may choose to engage. As well as reviewing your technical partner s capability, it is essential to consider the entire mobile value chain in order to determine which party will undertake which activities. Clearly, limiting the number of parties you need to manage makes things far simpler, so where possible seek solutions that are available via your Enabler or MNO, as this will significantly reduce project costs and time to market. As well as reviewing your technical partner s capability, it is essential to consider the entire mobile value chain in order to determine which party will undertake which activities. Also consider the tools already in use in the MVNO market, as well as the upgrade roadmap for new capabilities that could help your business in the future. Most important of all, choose partner that you feel can create the strongest relationship with your own organisation major concerns or differences at the outset will be magnified and stress-tested over the life of the relationship. The Enabler and MNO need to act like a member of your own virtual team and be committed to supporting your long-term success. 4. INVEST IN PLANNING YOUR PROJECT...the most important element in the next phase is to fully define your project, and to ensure that you have rigorous project management and business analysis processes in place. Managing the launch of an MVNO is a significant undertaking and requires an experienced project team to deliver. Having chosen your partner, be it directly with an MNO or via an Enabler, the most important element in the next phase is to fully define your project, and to ensure that you have rigorous project management and business analysis processes in place. Managing the launch of an MVNO is a significant undertaking and requires an experienced project team to deliver. Ensure that you accurately and precisely define your requirements and business objectives, and ensure that all parties involved in delivering the final solution fully understand these requirement DIGITALK s experienced project managers and technical experts have worked intricately with our existing MVNO customers. Over the longer term, we have a track record of working with our customers to provide

9 the subsequent enhancements that they require as their business evolves. This unique, hands-on experience and expertise is retained in our team, and is available to assist all new MVNOs customers throughout the lifecycle of the relationship. During the project build phase this experience pays back enormously. For every project we invest significant time in fully scoping the required solution, and working with our partners to ensure that all parties are aligned before the build is even started. Building this relationship allows us to fully understand the requirements of your business, and to create a collaborative environment in which all parties can work together to deal with unexpected project challenges, such as scope creep, without impacting the delivery deadlines. For every project we invest significant time in fully scoping the required solution, and working with our partners to ensure that all parties are aligned before the build is even started. 5. LAUNCH IS THE BEGINNING OF THE JOURNEY So finally that great day will arrive, the SIMs or handsets are in distribution, the press releases have been written, the sales teams are out in the field, and the customer services team are awaiting their first interaction with a paying customer. It feels good, but don t kid yourself that this is the end it is just the beginning. New customers mean new challenges. For example, customer churn, now needs to be considered. So it is vital to plan for all such predictable outcomes even before the launch, and certainly not as an afterthought. You will need to constantly innovate and evolve your proposition in order to retain customers. You will need to plan how to predict customer churn and the factors involved, and build retention schemes to reassure customers that you are still offering the best service for their needs. Finally, you will need to constantly monitor the market to ensure that you remain differentiated from your competitors. It is at this point that the work you put into choosing the right technology and network partners should start to pay dividends. If you have chosen a true partnership you will be able to draw on the experience of your partner, who can help you to manage these challenges. Ideally, you will have planned a strategic roadmap of new products and services that you can deploy to stay ahead of the competition and constantly refresh your customer proposition....your partners should stand side by side with you, taking whatever actions are necessary across the partnership to get the business back on track. It is this on-going relationship and commitment to joint success that will ultimately lead to growing a successful MVNO in the mobile market. But it is when things are not going quite so well that your relationship will be truly tested. It may be that the market has changed dramatically, or that a key competitor has launched and is challenging your business, or it might be that your host MNO s retail team are aggressively targeting your market segment. Whatever the challenge, your partners should stand side by side with you, taking whatever actions are necessary across the partnership to get the business back on track. It is this on-going relationship and commitment to joint success that will ultimately lead to growing a successful MVNO in the mobile market. So to summarise, building a successful MVNO business follows exactly the same principles as building any other successful business. Identify a customer need, build a sound business pan, engage a team of dedicated experts to deliver it, and continue to innovate to grow and expand the business.

10 Case Study MIGRATING A LARGE SCALE MVNO SITUATION Having engaged in a Joint Venture with a leading retailer to operate a successful MVNO for some years, a major European MNO was looking to take full ownership of both the business and operation of the service. Options available included landing the MVNO on its own Operations and Business Support infrastructure or engaging with an MVNE to simplify integration and support of the MVNO. REQUIREMENTS The key requirements were to migrate the entire customer base with minimal disruption, in particular to maintain as far as either possible - or desirable - the same products and services when migrated. The short term requirement was to migrate the post-paid customer base, with the later ambition to support the pre-paid subscribers within the same environment. SOLUTION DIGITALK was selected by the MNO for a number of reasons. Firstly, DIGITALK Mobile Cloud incorporates the capabilities and scalability required to support the MVNO s products, services and customers, from subscriber provisioning, through charging and billing, to CRM and self-care. Second, with DIGITALK s capability to support both pre- and post-paid subscribers the MNO knew it would have the solution to both its immediate and future needs. Last, and certainly not least, DIGITALK was able to demonstrate the flexibility, competence and capacity to deliver a complicated, large scale subscriber migration with minimal customer disruption. So, on the back of comprehensive planning and preparation, the entire migration was successfully completed in under three months. BENEFITS For the MNO, DIGITALK Mobile Cloud has delivered migration of a large scale, existing MVNO with minimal impact on its existing network and services infrastructure, factors which might otherwise have made the project inviable. As the sole owner and operator of the MVNO, the MNO now has complete control of costs and the ability to offer distinct mobile propositions to the market without affecting its main brand. And from the MVNO s perspective, there is the freedom to address new market demands and opportunities relatively independently from either the MNO or its previous co-owners.

11 About DIGITALK We help service providers navigate and prosper in the changing world of communications services. We know how important it is to be agile, to adapt swiftly and easily to changing circumstances and to provide whatever support our customers need. We make it our business to provide flexible solutions that help you chart a safe path ahead and our collaborative approach means that we ll be there to support you and ensure your long-term success. For innovative service providers there are significant business opportunities to be found in communications markets across the world. New technologies provide highly cost-effective ways for new players to leapfrog established operators and for existing companies to quickly diversify their services. DIGITALK provides operators and service providers with Cloud services that enable them to exploit evolving network technologies across the mobile, fixed and broadband worlds to outflank their competitors. We provide a complete network platform, fully integrated with powerful OSS and BSS capabilities, which enable fixed and mobile service providers to launch a wide range of wholesale, retail and mobile services, pre- or post-paid. All of our solutions are backed by comprehensive consultancy and support services, designed to speed adoption, get you to market quickly and to ensure the smooth operation of your business. Providing solutions for over 15 years to hundreds of service providers around the world, we have the Cloud platform, applications and service to help service providers achieve long-term success. DIGITALK Limited 2015 All rights reserved. This Documentation contains proprietary information, which is the property of DIGITALK Limited and is protected by copyright law and international treaties. The information and intellectual property contained herein is confidential between DIGITALK Limited and the customer, and remains the exclusive property of DIGITALK Limited. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form without the prior written consent of DIGITALK Limited. Due to our policy of continued product development, the information contained in this document is subject to change without notice and does not represent a commitment on the part of DIGITALK Limited. Every effort is made to ensure the accuracy of this information. However, DIGITALK Limited cannot warrant that the documentation is error -free, nor can it accept responsibility for errors and omissions.

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