Research Notes

Buy your own “off-the-shelf” discount mobile service provider package – even if you have no knowledge of the mobile industry at all!

Now the “One-Stop-Shop” concept is on its way to the mobile sector! Just imagine – if you are thinking of starting your own discount mobile service provide – a complete, ready to go discount mobile service provider operation, packaged and put in a carrier bag all ready to take home and set up. All you need to do is to add a strong brand name and off you go! In the future mobile operators will offer the sales and support of “off-the-shelf” discount mobile service provider packages that can be sold to companies that have little or no understanding of the telecommunications market.
Few people will dispute that the discount mobile service providers are here to stay. The customers have accepted to register and pay for their mobile usage themselves on the Internet and this new business model is generating a profit for the discount mobile service providers. What is a little surprising however, is that the development of the discount mobile telephony market in the future will be driven by new types of market players – companies that have no prior experience in the mobile sector at all!

Amongst the new players on the discount mobile market will be companies that have little or no experience in this area at all. But they will have a very strong established brand name within their own industry and the ability to roll out a big marketing footprint – and it will be solely these two factors that they will use to establish and market their own discount mobile service provider company.

This new business model is both very interesting and very realistic because mobile telephony is in a sense both very complex and yet very simple. Complex because it requires expensive infrastructure and technology to establish and run a full-scale mobile telephony company, yet simple because once that infrastructure is established and running, it is relatively easy to sell mobile telephony and services through a third party like a MVNO (Mobile Virtual Network Operator) or a Service Provider. This is especially the case with the discount mobile service providers, where the MVNO’s or Service Providers use the Internet as their primary sales, distribution and service channel and do not need to establish physical retail stores.

Many companies that have a strong brand within their industry are already thinking about how to be able to utilize that brand by entering the mobile sector with some sort of discount mobile offering. Companies with both a trustworthy brand and a large loyal base of customers will be very will equipped to enter the mobile market – as trustworthiness and effective marketing are key factors in achieving success in this market.

Companies will be able to stick their already known brand name on to a discount mobile service offering and thereby capitalize even further on their brand name and the investments they have made in marketing the brand. The ideal situation is almost if a company already mainly uses the Internet to market and sell their products – as discount mobile telephony will then just be a new offering on their already existing site that their customers already are familiar with.

Companies in this category are already establishing themselves on the mobile discount market e.g. discount airlines like Virgin, Ryaniar and easyjet already have – or are in the process of starting – discount mobile service providers. Other companies we will soon be seeing doing the same expansion will be from the FMCG sector (Fast Moving Consumer Goods) and even some of the large professional sports clubs.

These companies can however only deliver their well-known brand name and marketing power – so someone else has to deliver the mobile know-how and support. Here the mobile operators can step in – not only making money from the mobile traffic in their networks that these new discount providers are creating, but also making money on the services that the mobile operator will be handling for the new companies – services like billing and customer care.

The mobile operators will in other words have to be able to offer a one-stop-shop, where well known brands can purchase a ready to go turn-key discount mobile service provider package that really only needs a brand stuck on it before it is ready to market and sell. Brand companies will be able to choose how many functions and services their new discount offering will feature and to what extent they will handle various functions themselves – or let the mobile operator take care of things.

Strand Consult sees this as a very natural development on the market for mobile telephony. In Denmark – and other countries – the discount mobile service providers have already shown their ability to create very good turnover and profit. It will be a perfectly natural step for companies outside the mobile sector that have a strong brand to use their brand to their advantage by entering the mobile sector. The mobile operators will start competing on who can offer the best off-the-shelf discount solution and thereby attract the largest and most successful up and coming MVNO’s and discount mobile service providers.

This new business area of discount mobile telephony has just been thoroughly analyzed in Strand Consults latest comprehensive report “The Moment Of Truth – A Portrait Of The Discount Mobile Service Providers Success”. This report has examined the Danish mobile market, where discount mobile telephony has in a very short period of time, managed to turn the whole mobile market upside down, completely changing the competitive parameters that were until recently governing the market.

The report focuses on how the two Discount Mobile Service Providers (Telmore and CBB Mobil) have managed to acquire no less than 43.7% of all new mobile customers from 2H 2000 to 1H 2003! This is an outstanding achievement considering these two companies were both launched at the end of 2000. Add to this that around 20% of the total Danish mobile customer base is using a Discount Mobile Service Provider today and you just have to be pretty impressed. The report also analyses the development of the end-user prices for voice and SMS messages. In the past 10 months alone the price has dropped by around 50% so a discount mobile customer can today talk on his mobile phone for just 0.091 Euro and send SMS messages galore at only 0.026 Euro pr. message. It is only a question of time before we see a similar trend on all the other Western European mobile markets.

The first discount mobile service providers were started by visionary individuals with a deep knowledge and understanding of the mobile sector and the Internet. At the time no mobile operators in Europe imagined that only three years later they would become subcontractors to these new discount companies – delivering turnkey discount solutions to companies with no experience in the mobile sector at all, but simply using their already established brand names to enter the mobile marketplace. Now the mobile operators will have to work hard to offer the best turnkey discount solutions – and sell them to their worst competitors and to add to the irony – those competitors do not even have mobile telephony as their core business.

More information “”The Moment Of Truth” – A Portrait Of The Discount Mobile Service Providers Success”

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