3 challenges facing a burgeoning virtual telecoms market

Traditional Mobile Virtual Network Operators (MVNO) are making an unprecedented comeback. This is partly due to established Mobile Network Operators (MNOs) capitalising on new markets, but there are also a whole new raft of companies and industries such as banks, supermarkets and media companies setting up their own MVNOs.

The MVNO market is predicted to double in size by the end of 2018, so the time for companies to better understand the challenges inherent in setting up an MVNO has never been better.

Here are three key issues that MVNOs are facing, and how budding MVNO operators can rise to those challenges.

1. Focus on value added services, not price differentiation

The type of company launching MVNOs is becoming increasingly diverse. While traditional standalone MVNO organisations still exist, there is now a new breed emerging.

Banks, supermarkets and media companies have entered the market with their own MVNO businesses, not to drive revenue but to strengthen loyalty programmes. They can therefore afford to undercut traditional players on price, presenting significant challenges as the existing players can’t differentiate on cost. Instead, they need to look elsewhere to find differentiating factors.

Differentiation can come in various forms. For example, MVNOs could offer a selection of value added services, such as IP PBX, managed services and business solutions. The area of business customers has also been relatively unexplored and could provide copious opportunities to maximise revenue.

At the end of the day, whilst price is still hugely important, its disruptive influence is diminishing and customer care, quality of service and the provision of new services and technologies are what will ultimately set the business apart from the competition.

2. Adapt in order to capitalise on every opportunity available

One of the main challenges facing MVNOs is expanding customer growth without impinging on the existing business. Competition for customers may be fierce, however a huge amount of MVNOs are still hesitant to enter the niche pockets of opportunity that exist, such as pre-paid only deals.

This is due to concerns around dilution of the brand, their ability to target them in the most cost-efficient way possible, or even the fact that they may one day become a direct competitor.

>See also: SDN: Ask why, not what

The solution is that both MNOs and MVNOs in today’s world need to be flexible. They need to adapt their approach to new customers, markets and opportunities in order to capitalise on every single opportunity available. It is important to recognise that if a certain segment of the market isn’t serviced, another player will notice, jump at the opportunity, and secure the customers for themselves.

Flexibility is unfortunately not a traditional MNO strength and this is one of the main reasons that MVNOs came about in the first place. However, the challenges presented by technology advancements, as well as evolving industry and customer trends means flexibility is now an essential as opposed to a bonus.

3. Increase collaboration between MNOs and MVNOs

There needs to be a change in the way MNOs and MVNOs work together. Increased collaboration is crucial and will help both parties maximise the value of the partnership.

While there is always the risk of the MVNO competing with the host network, they will also generate new managed service opportunities, like those provided by mobile virtual network enablers (organisations that provide business infrastructure solutions to MVNOs).

This in turn allows the MVNO to focus on areas it specialises in, like marketing and customer acquisition, growing the business and increasing MNO wholesale revenues.

It is now relatively rare for MNOs to be scared of MVNOs stealing their business. They now recognise the value MVNOs can bring to their business.

That said, MNOs still have concerns about the business models MVNOs employ. Closer working relationships will help to iron out any differences that might exist in this area.

The MVNO business has evolved so there are lower margins involved but it does not have to be this way. If MNOs and MVNOs can learn to collaborate more, diversify their offerings, and build innovation into their business, they will maximise revenues.

>See also: Network maintenance: the key to 4G and 5G success across the UK

As the new wave of MVNOs continues to rise, and as the MVNO market increasingly incorporates non-telecom brands, it will become increasingly difficult for long-established businesses to survive. Flexibility, diversification and adoption of key emerging technologies as well as the ability to partner successfully with MNOs is essential for MVNOs that want to stand apart from the competition.


Sourced from Naufal Zamir, managing director, Zamir Telecom


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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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