Research Notes

Are MVNOs the mobile operators saviours?

When we here at Strand Consult are out conducting one of our numerous workshops around the world, we cannot help notice how mobile operators are expressing an immense fear of the changes happening on the mobile market. Across Europe, mobile operators have been horrified as the discount mobile wave has rolled across many countries, resulting in drastic price reductions on voice and SMS. This has resulted in mobile operators either already having adapted to these changes in the market or getting ready to change to the new market conditions that have resulted from the entrance of discount mobile telephony on the mobile market.
But discount mobile telephony should be perceived as a transition phase, moving from the phase where mobile operators had a “one size fits all” strategy, to a market that mostly consists of a great number of segmented mobile providers without their own networks and where discount mobile providers will then just be another segment targeting an individual segment – the price sensitive mobile consumers.
The horrific scenarios that many mobile operators are picturing are mainly created by their pessimistic views of a future mobile market with countless segmented mobile providers that they fear will result in an enormous pressure on mobile prices due to the increased competition. But mobile operators have every opportunity to take advantage of this development. However that will require that they actively adapt their business models to the new future and also realise that the mobile providers without their own network can have a positive influence on the mobile market.
By actively using “White Label” products, mobile operators can not only gain control over the market, but will also be able to attract the most attractive mobile providers. “White Label” products are mobile products that the mobile operators’ wholesale customers can purchase/license, adapt and resell under their own brand name to end-users. A. “White Label” product will therefore usually consist of a number of platforms, for example a location based platform or an instant messaging platform.
The mobile providers’ platform-based offering of ”White Label” products to mobile providers that do not want to handle the technical mobile infrastructure themselves will be an asset to the mobile operators, as their “White Label” products will be able to “lock” wholesale customers to that mobile operator, making it difficult to change to another mobile operator. This does however require that the products are so generic that the mobile provider without their own network that is using the mobile operator’s network can thereafter adapt the product to their own needs. For a successful mobile operator this will not just require simple branding, with graphics and logos adapted to the mobile provider, but also the actual product and functionality should be able to be adapted by the mobile provider. This will ensure that new mobile providers do not end up being copies of each other, but can instead differentiate themselves and thereby target their niche segments.
On a market characterised by segmented mobile providers, the “White Label” products will most certainly be a competitive parameter for the mobile operators. The successful mobile operators’ wholesale departments will therefore expand their selection of product offerings targeted at mobile providers, which will result in a greater level of competition among mobile operators on the markets characterised by mobile providers without their own network and delivering the correct products to wholesale customers will be one of the ways that mobile operators can differentiate themselves.
These and many other issues are thoroughly discussed in our new mobile report How to Succeed in the Second-Generation MVNO MarketThe report describes and analyses the changes that the mobile operators are facing, thereby helping them to better prepare and adapt to the challenges of the future mobile market. This new report describes in detail all the changes that are currently taking place on the mobile market and points out that the mobile operators’ adaptation process is by no way over – on the contrary, it has only just begun.

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