Research Notes

The mobile market is changing fundamentally

– and mobile operators will have to as well, to stay successful
Although individual mobile markets are at different stages of development, Strand Consult has identified five key evolutionary phases that all mobile markets are destined to go through. They are as follows:

The copy phase – mobile providers without a network come onto the scene using basically the same business models as MNOs.
The discount phase – discount mobile providers enter the market.
The consolidation phase – this phase sees consolidation among the players through mergers and acquisitions
The segmentation phase – MNOs, SPs and branded resellers launch niche or segmented mobile providers.
The brand phase – new mobile providers as well as retailers enter the marketIn the beginning when markets first opened up to no-network mobile providers (either due to regulation or for commercial reasons), the new players were typically direct copies of MNOs. New entrants also often operated in several markets at once, in some cases as MVNOs and in others as MNOs.
This changes in the discount phase, which is the stage that many European mobile markets are in presently. In the discount phase, the prices on simple services such as voice and SMS drop dramatically. In such countries, the market moves inevitably towards consolidation, where the best discount mobile providers are eventually acquired by MNOs. This effectively halts the downward price spiral and gives control of the mobile market back to MNOs.
This does not signal the end of the market’s evolution. The consolidation phase is just the start of a new phase – the segmentation phase. This phase results from the almost saturated nature of the mobile market, which makes it necessary to seek to attract the right sort of customers. MNOs are unable to cover all market segments through their own sub-brands, so in this segmentation phase successful MNOs actively use virtual mobile operators to segment the customer base to ensure that the cost of accessing niche segments does not rise uncontrollably.
The segment phase is often followed quickly by the brand phase, where players from outside the mobile industry begin to establish themselves as mobile providers. This new kind of mobile provider does not necessarily have a core expertise in mobile telephony. Instead, it seeks to exploit a strong brand, distribution capabilities and/or a unique service proposition.
It is critical for MNOs in all markets to understand and acknowledge that their market will go through each of these evolutionary phases. Mobile operators received a rude awakening when the discount phase suddenly exploded in many markets. They will have yet another surprise if they fail to grasp quickly the implications of the coming segmentation and brand phases, and use them to their advantage.
For current and future virtual providers, the coming segmentation and brand phase’s is an important factor in their future strategies. They need to acknowledge the fact the brand and distribution is important in the future mobile market, and not to only target the discount model.

These trends and many more are explored in detail in Strand Consult’s latest report.

How to get success in the second Generation MVNO Market

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