Inked Pixels / Shutterstock.com
We have been discussing the increasing potential of the MVNO for many years now. Our most popular article of all time is one written almost four years ago entitled ‘five things that make operating an MVNO tough to do’, (except in those days we put Every Word in Capitals).
The development of the MVNO market has been a quiet one, but a sure one. Unlike some, more volatile, trends, a new brand, targeting a particular segment is a good bet.
And with the devices that we carry around on a daily basis, the possibilities increase hugely. As guest Robert Machin wrote just last month, ‘fact is, the phone is just a platform for delivering services’.
He goes on to present several examples of the potential to address specific market segments. Clubs and associations with large memberships will benefit from specific news and offers, and high end supermarkets and financial publications are all examples where success is being achieved.
Some incumbent telcos have gone down the MVNO route as well. O2’s giffgaff and AT&T’s Cricket, for example. Setting up an MVNO makes perfect for incumbents, of course. It is the sensible way of dealing with the inefficiencies and high cost of legacy. Leave it and move on.
It also allows telcos to revolutionise their customer service operations, which, by and large are in a desperate state.
It comes as a small surprise that MVNOs are being launched by ‘next door neighbours’. Today sees two announcements.
First, Sky in the UK, with 11 million customers is becoming a quad player and launching an MVNO (one of the worst kept secrets in the industry). Their customers, according to CEO Stephen van Rooyen, want flexibility in their mobile data usage, and he plans to give it to them by allowing customers to ‘piggy bank’ data into the next month. A customer base of 11 million will also come in handy and the company will allow free calls between existing customers.
Second, Swiss retailer, Migros is launching M-budget to deliver ‘flexible service options for cost conscious customers’. The company is being supported by Swisscom, who, in turn, is being supported by real-time provider Matrixx Software.
Once you start thinking about how many MVNOs there could be, it is hard to stop. As the IoT and connected everything becomes an embedded part of our lives, almost every supplier becomes a potential MVNO. Car makers, for instance, now have access to an incredible array of data on their customers, who might well be tempted by a BMW or Mercedes offering.
The problem, of course, is that the market could become a very crowded one, and very fragmented. If this trend continues, then the ramifications for telcos could be seismic. In fact, it could turn the consumer business model on its head, as Machin says.
Soon, the term MVNO, along with ‘IoT’, could disappear, as they both become ‘business as usual’.
‘Incumbent MVNOs’ or ‘second brands’ are also an excellent way for the long-established Telco to turn a different face to the market and hoover up customers for whom the main brand would have had no particular appeal. Giffgaff is a perfect example – an image and approach that is highly differentiated, not just from the market in general but from its Telefonica parent.
Not sure I agree with the overlap between MVNO and IoT. I read this a lot, but having thought about it a bit recently, it seems to me that the relationship between a Telco and an IoT ‘player’ is likely to be less wholesale, more a bespoke enterprise customer relationship.