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MVNO business models and marketing approach

Many flavors of MVNOs are possible, however each business must endeavor to come up with its own unique recipe for success. In short, here are the main MVNO models and their marketing approach:

• Discount MVNOs – nearly a quarter of existing MVNOs have chosen the discount base MVNO model and their service offering usually includes basic voice and SMS services at lower tariffs for both prepaid and postpaid customers, adding to it the flavor of cheaper handset devices. In terms of long term sustainability this approach can prove to be unyielding.
  An example is Virgin Mobile US which began by targeting the 15-29 year old age group which was untapped due to its poor or nonexistent credit. Since its launch in 2001 Virgin Mobile US attracted more than 5 million subscribers, making it the fastest growing and the most successful MVNO in the world. It was acquired by Sprint in November 2009 for nearly $500 million and now offers also a broad range of innovative value added services.
• Lifestyle/niche MVNOs – such MVNOs focus on specific niche markets, from very young demographic categories all the way to senior citizens. Pricing plans and handsets offers are adjusted to the targeted segment’s needs. As an example, GreatCall has been targeting baby boomers and the elderly community in the US since 2006 and operates on Verizon Networks.
• Media/Entertainment MVNOs – they follow trends in the mobile industry, embracing content advertising on mobile phones. Such MVNOs offer free or subsidized mobile phone services to subscribers willing to view a number of targeted advertisements. Carriers, media brands and content companies are optimistic about the future of this model (an example: Blyk, a Finnish, ad-based MVNO).
• Ethnic MVNOs – they target diverse ethnic groups in specific regions, looking to leverage international calls to their country of origin and ethnic community specific content. With several successful players in the market and many more appearing, forecasts are optimistic regarding the future of ethnic MVNOs.
• Business-centric MVNOs – they target high-usage and corporate subscribers, providing advanced services such as fax/data and group administration. To exemplify, Abica was launched in 2008 in the UK and targets SMBs, offering a bespoke range of business services, consumption monitoring and special tariffs for landline, mobile and data services allowing businesses to run their telecoms flexibly and efficiently. Abica’s turnover increased by 50 percent in 2009-2010 and aim to reach $5 million by 2013.
• Brand MVNOs – they leverage a strong existing consumer brand, and often a point-of-sale distribution network. The numerous supermarket MVNOs are good examples. By leveraging their brand value, their customer base and developed distribution channel, they are strong competitors for incumbents. Tesco Mobile, launched in 2003 by grocery retailer Tesco, is an example.
• Data MVNOs – they focus on the provision of data services, games, videos and other attractive applications to their subscribers. Content providers are usually dependent on service providers for delivery and billing of their content. Also, flat data rates are still not available in many parts of the world, consequently content download might prove to be quite expensive, therefore their content providers service consumption limited. On the other hand, many operators do not charge for data download when content is being downloaded. Supported by mobile payments, an opportunity arose for content providers to overcome these barriers by becoming data MVNOs.
• M2M/telemetry MVNOs – they provide M2M (machine-to-machine)/telemetry services, enabling companies and consumers to enjoy new ways to manage and monitor their businesses, lives, and health. Clearly there is enormous potential considering also the hype around MHealth. M2M communications offer a plethora of opportunities to all parties involved, from product manufacturers, to HNOs, MVNOs through to end users.
• Quad play MVNOs – they provide services in the four major communication areas – broadband, television, fixed and mobile telephony altogether. Quad play MVNOs seem to gain more and more ground in the telecom space as subscribers tend to prefer such integrated packages which usually prove to be more attractive in terms of bundled price.
• Roaming MVNOs – they provide advanced lower cost roaming solutions, allowing subscribers to have multiple “virtual” local numbers and identities in different networks, thereby benefiting from local rates instead of roaming charges.

For more information on MVNOs’ models and the key challenges they should address before/after launch to enhance their success, please read this comprehensive whitepaper: The path towards MVNO success