ComputarisTable of Contents
Technology/Marketing knowledge matrix ……………………………………………………………………………………………………………7
Introduction
MVNO is a risky business. It requires thorough telecom landscape knowledge, as well as an excellent marketing strategy to access a specific segment and become successful.
/
technology?
Types of MVNO entrepreneurs
We, at R Systems, are often approached by various organizations being interested in starting an MVNO business or already running MVNOs that look at further investments in technology. Many are asking directly about the technical capabilities and pricing. We translate such requests in two scenarios: either they are in the learning phase or they are so advanced in their business case implementation that the only need is to select a technology and then kick off. As average, most of them are very early in the learning phase.
As mentioned in the introduction, an MVNO business start-up requires knowledge in three main areas: marketing, technology and operational efficiency. Cost-wise, marketing and technology usually weight more on CAPEX while the operational efficiency is related to OPEX. Many customers would like to move as much cost as possible under the OPEX, hoping that the revenues generated from the business will pay for that. Of course, smaller CAPEX is more attractive to investors inclined to invest in a potentially risky MVNO business.
We usually assess the MVNO customers interested to acquire technology from two
perspectives: Marketing and Technology. We do this because based on such assessment, we know that they will need a different type of approach in the pre-implementation phase and we can help them differently.
page 4
technology?
Level of marketing knowledge
The MVNO may know very well their target market segment or they can be quite vague about that. The vagueness may be caused either by some level of secrecy or by simply not having decided yet which segment will be addressed. If the latter, a good advice for the MVNO representatives would be to make sure they have a clear strategy: segmentation, communication channels, distribution network, and realistic costs. Clear strategy overthrows technology investment in the case of an MVNO business. A low level of knowledge on the marketing side must be an alarm signal for any party involved.
But there are MVNO representatives with a high level of knowledge on the marketing side. For instance in case of ethnical MVNOs, they know their audience’s habits, the places they prefer, the unique selling proposition, the services which may impact their target audience. They may even know how much budget should be allocated for communication and the level of incentives to be paid to the dealers selling their product.
Usually there are no extremes; the level of marketing knowledge can be at any point
between low and high. This can be assessed by the MVNO itself by simple questions such as:
• How large is our target market?
• What is the realistic market share we can achieve from our target market?
• Which is the most efficient communication channel to reach them?
• What are the costs associated to our communication strategy?
• Is our target audience already addressed with similar services by other MVNOs?
• How can we differentiate? Why will anyone buy our product?
• Who will sell? Why would they sell my product?
• How much is the cost of selling to these potential users?
If you are considering investing in an MVNO, ask yourself the above questions. Try marking from 1 to 10 for the level of certainty in your
answers. If you do not know the answers with certainty you may need to look for some help from a business consultancy company or do your homework better.
Perhaps you just have a good idea but you do not know yet how this will work out. You still want to try it out, obviously by investing as little money as possible. From our previous experience, without a clear marketing strategy MVNOs have very good chances to fail. You may be lucky or simply visionary and this may work out well but sooner or later you still need to answer those questions. The sooner the better for the long term benefit of your business.
page 5
technology?
Level of technology knowledge
Under technology knowledge we should capture on one hand architectures with systems, interfaces, redundancy and business processes on another hand. A person may excel in either architectures or in processes. Excelling in both may require an entire team focusing on technology. We believe that technology is important but it is less important than marketing. It is rare that the success in business will come from the technology alone. Many times the technology can be outsourced but the execution of the marketing strategy must remain in-house.
The level of knowledge about the technological aspects may influence however the business strategy. It is worth asking yourself the following questions:
• What basic services shall we launch? Are all the services really needed?
• Which Mobile Network Operator will host us?
• Will it be a loose or deep integration? •
• Do we have skilled engineers to operate the adopted technology?
• Does our product require many changes? How many and of what magnitude?
• What other non-standard telco services shall we offer?
• How flexible should the system be? Are we ready to pay extra for extra flexibility?
The confidence level with which you answer these questions will determine the validity of the strategy you adopt for technology. If you are unsure on some answers then you should also expect a high cost fluctuation during and after the process of specifications definition. Some needs can be in conflict sometimes: the need for low investment but also a need for high flexibility, while flexibility brings additional costs by nature. The sooner you know how your technology will evolve the better for your visibility on how much investment you need to make in technology.
A clear marketing strategy could help you evaluate from the beginning if such high flexibility is more than just a “nice to have” expectation that could materialize in significantly increased initial cost without a real need in terms of future service offering to
backup such investment.
In any case the platform that you would choose should prove to have a good level of openness. Standard APIs or well documented frameworks will allow the MVNO’s staff to develop further services. This brings some comfort regarding the further evolution of the platform.
page 6
technology?
Technology/marketing knowledge matrix
Depending on the levels of knowledge on technology or marketing the MVNOs need various types of help. We allowed ourselves to create some categories based on MVNOs level of knowledge in marketing and technology. Depending on these categories the MVNO should have different priorities.
page 7
technology?
The Rookie
The Rookie has a low level of knowledge on both technology and marketing. Most probably the business case is in an inception phase still. The requests for technology sound like: “Tell me what you have and for how much money”. Based on the answer the Rookie will create a business case to present to potential investors.
If you feel that you may fit into this category then you should be aware of the risks. Beware that a technology vendor can make a budgetary estimation based on previous experience in other deployments. But the tricky thing is that the deployments are very much different one from the other and in the end the pricing can significantly vary.
The best for the Rookie is to look for an offer from an MVNE or MVNA. The MVNEs can support most of the required features of an MVNO and most importantly: it is already running. The involved financials put more weight on the OPEX costs proportional with the number of final users. Therefore a model of pay-as-you-grow is more accessible. Of course, there would be a setup fee as well.
The setup fee would cover for the MVNE’s effort to set everything up for the new MVNO and it is also regarded as a proof that the MVNO is being seriously committed to this business.
page 8
technology?
Technology/marketing knowledge matrix
Speaking about commitment, the MVNE or MVNA will still like to understand the business model and the likelihood that the MVNO will generate as many end users as possible. So this means again marketing. The level of knowledge on the addressed market segment must become high as well.
There are countries in which the MVNEs are not present yet. In such case there is still the option to start just a Brand MVNO through a direct agreement with an MNO. This should be explored as well before commencing a massive investment in technology. On the other hand, if there is no MVNE on a market that may mean that the MNOs are reluctant to get involved with MVNOs. So, be prepared to talk about how your MVNO’s offering is not cannibalizing the MNO’s market. For such discussion you need the marketing expertise again.
So “the Rookie” should eventually become a “The Market Expert” before signing an agreement with an MVNE/MVNA or an MNO. If struggling on the marketing side, The Rookie may get the assistance from a business consultant. The business consultant could
define the business case by looking at:
• target segments (e.g. subscribers profile and numbers, revenue)
• positioning (e.g. ethnical, low-cost, roaming, loyalty based)
• service portfolio (e.g. value added services, content, related services to telecom)
• distribution strategy (e.g. online, retail network)
• handset strategy (e.g. SIM only, subsidization)
• offer definition (e.g. pricing, billing, payments)
• competition analysis (e.g. differentiators)
• communication (e.g. TV, online, specialized channels) This analysis would result in a good outlook on the MVNO’s marketing.
This analysis would result in a good outlook on the MVNO’s marketing. This document as a whole or parts of it would provide excellent inputs to MVNO’s management investors,
technology partner and the MVNE or MNO partners.
The next step would be to create the business models based on assumptions for revenues, CAPEX and OPEX. Now it would be good to have the input from a potential technology partner, be it an MVNE, the MNO itself or an OSS/BSS vendor.
page 9
technology?
Technology/marketing knowledge matrix
The Market Expert
In this category we have either MVNOs already launched on the market or future MVNOs with a well-shaped marketing knowledge but no advanced knowledge on the technology side. And perhaps it is not even needed because this is handled either by an MNO or by an MVNE.
When and why should such an MVNO look for technology expertise? Running an MVNO on an MVNE/ MNO has its own advantages especially related to a smooth start with a lower up-front investment. But on the other hand it may lead to some limitations in flexibility once the business needs to diversify.
For example our customers already running MVNOs decided to look for an investment in technology for the following reasons:
• To launch value added services faster
An MVNO with its own IT team and a direct vendor relationship enjoys a faster time to market. Exceptions exist, but generally the MNOs or the MVNEs may be reluctant to implement a small feature especially when
this is very specific to just one of the hosted MVNOs.
• To design faster their own tariffs
Changing a tariff in your own systems can be much faster than asking for a change at the MNO or the MVNE. This may be a good reason to have your own rating system at least. On the other hand, the MVNO should evaluate the need of such flexibility based on the expectations for change in the future. As previously mentioned, higher flexibility it’s correlated with higher costs and you should carefully evaluate if it’s worth the price.
• To get a better control on users
When the technology is outsourced the view on the subscriber’s activities may be in a slower motion or at a lower degree of detail compared to when the MVNO has got its own system. If the MVNO owns the data and the analysis tools, then the IT can offer better reports, detect trends for SIM activations, top- ups, service usage and calculate various business indicators.
• To run campaigns to win-back or drive
revenue
This requires a certain level of control on the systems used for campaign management and fulfillment. Own systems can facilitate the campaigns from inception through to final performance reporting.
page 10
technology?
Technology/marketing knowledge matrix
• To get control on the cash flow - When relying on a MNO or MVNA usually the cash- flow from the users goes via these parties before reaching the MVNO’s accounts. An MVNO that owns the billing and the invoicing system or voucher management system will handle the payments from the users and drive the payments towards the MNO.
An already existing MVNO has concrete data about the market, a more accurate view on revenues and better forecasting capabilities therefore can better tailor a perfect-match technology architecture to cover its needs and more accurately budget the needed technology investment. Also, they understand the real technical needs resulting from the limitations faced in the other model (working with the MNO or the MVNE). To find an offer for OSS/BSS stack the best is to compile a requirement document to obtain information about how vendors cover your needs.
For the Business Support functions the MVNO may want to be informed about:
• Management of dealers, incentives and commissions
• Customer management and care
• Billing and payment management
• Fraud management
• Voice, data, SMS control
• Device management
Obtaining inputs from several vendors, understanding their offerings well with advantages and disadvantages, and taking a good decision on the implementation, paves
the way to becoming a sophisticated MVNO.
The Technologist
The Technologist has a very good knowledge on the technology but lacks some knowledge about the market. Usually this is the case when the initiative comes from technical departments or is managed by technical departments. We will not repeat the obvious advice to build the so much needed marketing knowledge, the same recommendations apply as in the case of the Rookie. The technologist might fall in other traps:
The MVNO’s systems and processes differ in complexity from those of an MNO. MNOs have technical departments handling processes and systems in a coordinated manner. Hundreds of people need coordination and, for instance, TM Forum does a great job to define architectures, processes and in the end to set a vocabulary to be understood in the same way by everyone involved. But an MVNO has only a few technical people. The specialization is wider for a typical MVNO’s technical person.
page 11
technology?
Technology/marketing knowledge matrix
Not everything is important. The MVNOs must focus on the bare bone features that make the money. For instance the voice mail is standard for an MNO but for an MVNO this is perhaps not very important. Same for a WAP Gateway. Many examples can be found. Nowadays the systems offering this type of, let’s say, legacy services have become very cheap. But is it worth to spend any penny on them? How much do they generate? Are they a good fit for the MVNO?
Various vendors solve the same problems differently but similarly well. The technologist may be trapped in a specific way of thinking generated by the experience from a previous life. This does not make the vendors’ approaches wrong. An MVNO vendor cannot excel in everything. In the MNO’s world having various vendors in the same IT network is normal. In MVNO’s world there are many vendors offering everything in a box. What is the real strength of such offering? A vendor cannot excel in everything from business intelligence to the voice call control. Some vendors employ partner’s best of breed components to be equally good at more levels. But this may come with a price as well.
Worth checking.
Once getting the Marketing knowledge and overtaking these technical traps, The Technologist is on the right track to start-up an MVNO and become “the sophisticated”.
page 12
technology?
The Sophisticated
If you – the reader – fit into this category and you have read this paper this far, let me thank you. I am honored. Your organization is an evolved MVNO and knows well its own market and the technology needs. You’ve probably tried everything and you already know what is sensitive for your market. You found the limitations of your current systems and you are probably looking for more flexibility that would enable you to evolve. Or perhaps you are facing some end of support for some of your systems, therefore consider looking on the market for better alternatives, new vendors for your systems or sub-systems.
On the technical side, the sophisticated is in a very good position to create detailed requirements and evaluation criteria. Precise specification means receiving quotations closer to the final price.
The Sophisticated needs flexibility. A closed rigid box doing everything is not a good fit anymore. Open APIs and frameworks allowing extensions of the services or easier integration with existing or future systems becomes a must.
The Sophisticated may be very happy with its current platform but the need is just for new services such as:
• Integration with other business verticals: insurance, retail, banking, etc.
• More efficient loyalty campaign management
• More flexible pricing and rating
• Instant Messaging, VOIP, RCS, Mobile TV, Remittance
• Portal selling other goods or services
• Content management
page 13
technology?
Conclusions
Obtaining market intelligence and shaping a strong marketing strategy should have the highest priority for any MVNO. This is necessary for the sake of your business successful future but also because the marketing strategy will impact the choice of technology. A too wide offering of products and services needs a wider technology platform, therefore a more expensive one.
The MVNO must make sure that the chosen technology platform is flexible enough to allow the development of new products and services fast enough to keep the pace with the market fast evolution, consumers wants and needs. MVNOs should have a vision in regards to this market evolution and marketing is responsible for defining the MVNO’s needs in terms of technology platform flexibility. The operational efficiency has also its own impact when choosing a technology platform, but it comes second as priority.
To conclude, depending on the category to which an MVNO belongs to, according to this paper, the MVNO will have some priorities before choosing the most suitable technology to their business needs. This table tries to list
some probable scenarios. It is, however, not a definitive list but might be close to your personal situation:
page 14
technology?
Conclusions
Consideration The Rookie The Market Expert The Technologist The Sophisticated
Already running MVNO? Most probably considering a start-up
Yes. On MVNE or as a brand MVNO on top of MNO or not yet started
Probably. Not or it is an MVNE
Yes. On MVNE or own platform connected to MNO
How to deploy MVNO Become first a market expert
On MVNE/MVNA or brand MVNO on MNO
Own platform after getting market knowledge
Own platform
Main priority Acquire market knowledge, let technology wait a bit
Assess need for investment in own technology
Acquire market knowledge Improve the platform for better services
How a technology vendor can help
Technical education and budgetary offer
Technical education and budgetary offer
Cell text incompliance matrix and budgetary offer
Compliance matrix and budgetary offer
Budgetary offer’s accuracy Factor: 1-5 Factor: 1-3 Factor: 1-2 Factor: 1-1.5
Main technical impact on budgetary quotation
Network elements, prepaid/postpaid, VAS, integration with MNO
Network elements, integration with MNO
VAS, product definition Traffic estimation
Main factors to consider for decision to invest in technology
Acquire marketing knowledge first
No fun with the current technology, operational efficiency, missing support, need for more open platform
/
technology?
Prioritize. Marketing first, operational efficiency second, technology third. Make sure they all go hand in hand.
Double check if any technology platform is open enough to allow variations and adapt to your business evolution.
Focus on defining clear requirements. Any technical or budgetary deviations can impact both you and your vendor; for instance, the integration with the MNO impact the budgetary offer massively due to the involvement of Network Elements
Ask vendors for specific workshops prior to choosing the ”best offer”; you might be seduced by an initial low cost offering that could prove to be too costly on the long run, when having to adapt it to your business evolution
page 16
technology?
R Systems in the MVNO/MVNE context
We have extensive experience in MVNO/MVNE solutions implementations and provide a complete range of services from technical consultancy, MVNO systems integration into MNO’s network, technical consultancy and design for the MNO through to E2E projects (from business requirements to acceptance testing and project governance), professional services and testing. Furthermore, we also offer our own MVNO/E suite, which has pioneered the rating market, anticipating the need for convergent, flexible and high-performance pricing and rating for new emerging services such as VoIP, IPTV, mobile data and on-demand services; Our MVNO core is implemented in diverse networks worldwide, providing a convergent, carrier-grade pricing, rating, charging and billing solution.
Over the last 10+ years we have been involved in a broad range of MVNO and MVNE projects on all continents, from brand MVNOs to heavy MVNE projects involving development of core network elements. In total, our expert team has been involved in 15+ MVNO/MVNE related projects. Recently we fully replaced the legacy infrastructure of a
large MVNO customer in 9 months, delivering various different systems and migrating all customers to a unified, more advanced platform. The delivery included IN-SCP, Diameter signaling platform, rating & charging , voucher management system, integration layer, CRM and provisioning, self care, IVR, reporting, loyalty and churn, network monitoring system and SMSC.
For more information please visit www.eu.rsystems.com.
Got any questions? Contact us:
Tel: +40 21 204 5200
Email: marketing@eu.rsystems.com
page 17
technology?