Virtual Reality

The rise of MVNOs (Mobile Virtual Network Operators) is continuing at a rapid pace. This year alone, we have begun to see an influx of non-telecoms brands launching MVNO propositions, including Wolves FC, the RSPCA, Yahoo, and Red Bull, to name but a few. According to research from Informa, by the end of 2016, the MVNO market will consist of 186m customers, signifying that the new traction in the market has not gone unnoticed.

The key drivers of MVNO growth in the current economic climate are price-sensitive consumers and non-telecom brands recognising an opportunity to establish a more meaningful relationship with their existing customers, through the provision of mobile services.

Many brands have recognised, and are responding to, the growing appetite from the end user for a more straightforward service than the mobile network operators (MNOs) currently offer, with a price plan that matches their expectations, and a tariff that is in tune with their lifestyle. In order to meet this demand, brands are adopting the MVNO model in order to build on their existing relationships with the target market, and to maintain brand loyalty.

And this MVNO boom is not limited to the UK market. In a world saturated by similar tariffs and price plans, non-telecoms brands are now seeing a commercial opportunity in offering the end user a value proposition that the MNOs cannot match.

Niche segments
The MVNO model succeeds because of its ability to satisfy the needs of niche segments of end users, and its ability to offer more competitive pricing than traditional mobile operators. New, and established, brands are beginning to capitalise on tailored mobile services to build and extend relationships with their customer, raising the profile of the MVNO even further, whether it be through the ability to attract customer buy-ins by offering desirable promotions, or through mobile offers such as free minutes.

Many consumers are attracted to MVNO service offerings because of their simplicity. Whilst mobile operators focus on developing a range of different tariffs to target different consumer segments and lifestyles, in most cases the end user wants a simple rate plan with basic voice and data services. It is the loyalty factor that drives home the market opportunity for MVNOs, differentiating themselves from traditional mobile operators on price, and the brand association they can offer.

This is where retail MVNOs come into play, offering a model which allows subscribers to receive free voice minutes, or free access to mobile broadband and data services, in return for buying groceries or other consumer goods. This single market proposition aligns the brand’s MVNO to its core business, creating a stronger link between the retail and telecom products, and promotions, in the mind of the customer. As a result of this, the MVNO becomes an attractive prospect to consumers, allowing the brand, business or charity, to offer discounts, offers and loyalty card schemes to a single SIM card. Targeted promotions and loyalty points can be sent directly to a mobile device via SMS, or other forms of mobile technology, bridging the gap between the business strategy and the MVNO.

Specialist MVNOs
Apart from offering non-telecom brands, such as retailers, the opportunity to derive commercial benefits from MVNO models, there are still a number of niche market demographics that present an opportunity for specialist MVNOs or MNOs. MVNOs provide the perfect platform to reach out on a global scale, but also to tap into niche markets; such as migrant communities living abroad, for example, who wish to stay in touch with families and friends back at home.

Earlier this year Vodafone Egypt announced the launch of a new Italian MVNO called BLADNA, introduced to cater for the growing N. African community in Italy, comprised mainly of Egyptian, Moroccan and N. African nationals. The MVNO offered tailored services, including an Arabic-speaking call centre hosted in Egypt, tailored products and services, and the lowest rates for calling back home, through a high-quality service.

A further example of this is Daily Telecom, an ethnic MVNO, dedicated to the large community of Chinese people living in Italy, offering mobile calls to China and Hong Kong at a price lower than a local call, recognising the opportunity in the emerging market. In addition, Daily Telecom offered a complete customer experience package, with a website, sign up and voicemail service, delivered completely in Mandarin.

Connectivity needs

MVNOs have the ability to cater for the end-user individually, just as they cater to niche markets. MVNOs are able to provide a service that caters for the customer’s specific connectivity needs, whether it is a contract service, a pre-pay, or SIM-only package.

Whilst there are many tech-savvy customers making the most of unlimited call and text packages, and the ability to roam the internet whenever they please, there are still many customers who are less enthusiastic in their usage, and who want a tailored price plan. Mobile operators can see the monetary advantage of the tech-savvy consumer, and deliver services to appeal to their needs, often forgetting those who need a more catered service. MVNOs on the other hand can provide these end users with a service that suits their usage.

The MVNO market has grown significantly, as more and more brands recognise the positive effects an MVNO proposition can entail. Companies are no longer limiting their reach to the UK, or even Europe, but spanning internationally to expand their footprint globally; through retail, by adhering to emerging markets and by offering customers an international service at a competitive price.

We may also see this influx, predicted by Informa, evolving out of the recent European Union legislation, signifying a cap on roaming charges. With data, SMS and voice charges capped at a much more reasonable price, MVNOs will be encouraged to enter the new market. The new EU roaming regulations help both existing MVNOs and future MVNOs to compete with operators in providing roaming services to end users.

With this additional opening for new MVNOs to thrive, there seems to be considerable potential for Informa’s predictions to come true. If so, this may just be the beginning of the MVNO era.

Liudvikas Andriulis is CMO of Effortel