Research Notes

Many people are talking about IKEA’s entrance on the mobile market, but few know the full background of this new venture

A lot has been written about IKEA’s entrance on the mobile market during the past week and the MVNO venture behind, but very few people know the full story and who the people are that  are responsible for the MVNO that has signed an agreement to offer IKEA Family members and others inexpensive mobile telephony in the UK.
Here at Strand Consult, we have been monitoring this project for over one year and we know – and have worked together – with some of the people that are now responsible for building and operating this project. Many people wrongly believe that it is IKEA themselves that have entered this market and are running this project, but the project has in fact been created by a number of Danish discount MVNO pioneers – people that have helped build the two Danish no frill MVNOs CBB and Telmore.
To understand the background for this venture you need to go back to 2001/2002, where the two Danish no frill MVNOs CBB and Telmore were battling for the attention of the Danish mobile customers. The company CBB was run by Teddy Søgaard Pedersen and Telmore was run by Frank Rasmussen. For a period of 4 to 5 years, the two companies battled over who could offer the Danes the cheapest prices and best mobile offerings.
This Danish mobile market war became legendary and in our report we have described how these two market players in just a few years acquired no less than 20% of the Danish mobile market with their web-based discount concepts. There is no doubt that CBB and Telmore have been copied in many countries, but Family Mobile is much more than just discount telephony and IKEA – this concept has far larger ambitions.
If you want to describe Familymobile, you need to examine the people behind the company Mobile Partners UK Ltd and the setup they have created during the past year. The company’s main driving force is Teddy Søgaard Pedersen and Martin Petersen that were CEO and CTO respectively in the above-mentioned Danish CBB. CBB was a no frill MVNO that in a number of areas differentiated themselves from many other no frill players around the world. In actual fact, CBB was only a no frill player regarding their pricing – if you examine the services they were offering their customers, they were a high-end player that were offering their customers more advanced solutions than a number of the existing Danish MNO’s at that time.
Describing the many mobile services CBB launched is very comprehensive. Already in Q1 2003, CBB was offering their customers an advanced voice mail platform that offered unified messaging functionality combined with the possibility of having different messages for different callers. CBB Messenger was launched in Q3 2004. CBB WEB SMS came in Q4 2004, while CBB Forening (Society) including ENGODSAG (a good cause) and CBB Sport – conceps allowing societies, clubs, humanitarian organisations and others to make money on their members mobile traffic -were launched in Q2 2005. CBB Family was launched in Q1 2006 and was a family concept corresponding to the concept that has now been launched in the UK by Familymobile. The CBB Erhverv (Corporate) concept targeted at the small business segment was launched in Q4 2003. In 2007, CBB launched the CBB Marketplace, a mobile advertising service via MMS, where customers could make money by receiving adverts. The list of CBB services was very long and one could say that in a number of areas it was not the Danish operators, but rather the discount players like CBB and Telmore that were driving the Danish mobile VAS innovation during the period from 2001 to 2006.
In August 2007, a number of the people that created CBB and Telmore joined forces. They have found English partners in the form of T-Mobile, Flemming Capital Invest and Peter Bamford (former CMO with Vodafone) and a number of other private investors. The company they have created is a no frill MVNE (Mobile Virtual Network Enabler) – in other words a MVNO that helps companies like IKEA launch on the mobile market, without IKEA having to invest in the technical platforms, sign operator agreements or worry about how to achieve success on the mobile market.
You do not need to tell us that many companies dream of launching a MVNO – this is an area we know a great deal about. In our report we have described what this market looks like and how it will develop in the future and additionally what issues and challenges a MVNO, MVNE, SP, BR, mobile operator or technology provider should take into account on this market. Launching on this market is no walk in the park and requires an enormous amount of knowledge and hard work.
If you examine the setup that Teddy Søgaard Pedersen and the people behind Mobile Partners UK have created, it is obvious that they are making good use of their experiences from CBB and that they are following many of the recommendations we have put forward in our report There is no doubt that has been built on the top of a no frill MVNE, that with just five employees and a team of partners have created a company that can now launch many different MVNO brands in the UK and subsequently in a number of other countries.
The foundation of the technical setup is the billing platform that was originally designed for Telmore and is now developed, marketed and sold by – a company that has specialised in delivering the technological platforms that a MVNOs/MVNE needs. Drawing on their experiences from running CBB and Telmore, Mobile Partners UK have outsourced platform operation to CDRator, to thereby minimise CAPEX and have a more flexible OPEX. The company Retouch is handling the Web and CMS tasks, resulting in Familymobile having a flexible and scalable technical setup allowing them to handle multiple UK brands on their platform.
To sum it all up, you could say that what people perceive as IKEA’s mobile venture, is in fact a MVNE that has signed an agreement with IKEA allowing them to launch and operate Familymobile. We can see that the experienced team behind this MVNO has chosen a low-cost strategy and is taking advantage of all the experience gained on the MVNO market during the past eight years. We believe that in a short space of time, IKEA’s Familymobile will develop from being the UK’s cheapest MVNO to becoming one of the most advanced mobile players on the English market. Familymobile and the other companies that will launch on the Mobile Partners platform will most likely be able to offer their customers a wide selection of attractive services on top of the services customers already have today, including 3G, Web SMS, MGM (Recommend a Friend), Automatic top up and Family Budget (corresponding to CBB Family), with more services on the way – all services that can compete with the services being offered by the traditional mobile operators.
One could say IKEA’s Family Mobile concept has taken into account a number of the problems and issues that we have described and analysed in our report ” How to Succeed in the Second-Generation MVNO Market”. The report describes and analyses the changes that the players will face, helping them to better prepare for the challenges on the future market. The report is thereby a very efficient tool for players in this market in their efforts to create the optimal mobile provider strategy.

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