Let's hope MVNOs put some virtue into virtual networking

The cloud has put power in the hands of the people who love create services, ideally by fulfilling one over-arching need. In telecoms, there has never been a better time to create a framework and flesh out the model with a muscular framework.

At this year’s Mobile World Congress in Barcelona telco impresario Danielle Royston explained how to create your own Mobile Virtual Network Operator (MVNO). Royston has waited half a century to find her forte, and has emerged from the traps like a race horse. Royston became a telecom impresario relatively late in life, having built up reassuringly good people skills and life experience which, to the customers, is far more attractive than a man who knows how to speak machine language.

The importance of being able to shape technology around businesses and people, rather than expecting us to work around the technology, is tremendously attractive in an age where we constantly find ourselves at the mercy of some judgmental algorithm. This delayed passion has helped Royston to start three booming telecoms companies at the age of 50. TelcoDR is a telco cloud specialist, Totogi sells a charging service and Skyvera is a holding company that buys telecoms software tools and brings out the best in them. Now Royston insists that everyone in networking has the potential to start an MVNO.

Have you thought about becoming a mobile network operator? It sounds dead easy. You buy capacity from a mobile operator, like O2, and then rebadge it, with a name like Giffgaff and sell data packages slightly cheaper. But please resist the temptation to do the classic subscription bait and switch technique of the early adopters. It cant be a good long term strategy. Subscription service sleight of hand really is a race the bottom.

The typical MVNO should put the virtue into virtual network operations. People have had their fill of the mendacious network operators. Smarty, however, is has a great reputation for customer service and keeps no secrets. Both these MVNOs are operations rebadged from big telcos (O2 in GiffGaff’s case, Three UK in the case of Smarty.)

Can an honest reseller or systems integrator make go of it without their resources?

Andrew Davies founded mobile operator RWG Mobile as the only mobile service that recognises three issues important to the people of Wales. It speaks Cymraeg, the national language, which is surely something that should come naturally to any communications specialist. Secondly the service provider has shaped a service around the region’s unique geography and created software that makes optimum use of wi-fi for connecting mobile operators in areas where no radio signal of any kind is available, be it 5G, LTE or even 3G. Though it rebadges other telco’s capacity, RWG has diversified its service offering with two additional products, an IoT Connected Network and iCare, a healthcare platform with secure connectivity behind it.

The key differentiator is to treat customers as if it really wants to keep their business. RWG Mobile has to be good at retaining customers, since it operates on a small core of staff and under these extreme circumstances it learned to maximise the value of each customer relationship by earning the trust of its customers which, ironically, is precisely the opposite of what most automated customer relationship managers (CRMs) do. Big mobile operators are great at buying customers and terrible at keeping them, because that is where management and business operations are rewarded, according to Davies.

In the UK there is a growing backlash against the tactics of the Big Four, with regulator Ofcom revealing recently that it is opening an investigation into allegations that BT’s customer contracts are not clear about terms and conditions. Ofcom has also reported that there is little to choose between the technology offerings of MNOs. Coverage and speeds are roughly the same, subject to regional variations, according to tests conducted by Rootmetrics. So how does a CSP focus on customer retention more than acquisition. “You can launch without the bells and whistles but to succeed you need the right customers and the right operating structure. That’s why our unique products, Connected Networks and iCare, are crucial to us,” said Davies.

The Scandinavians seem do run service with much better success, says consultant Jon Strand of Strand Consult. Denmark’s invention in the MVNO has always been a good lead to follow, Strand says. It was Danish companies like the no-frill MVNOs Telmore and CBB that showed the rest of the world how web-based start-ups with no physical distribution channels could acquire a fifth of the Danish mobile customers with their fresh inventions in just a few years, Strand says.

The word MVNO is misleading, there are different types of MVNOs and how much network  infrastructure determines the difference between whether you are a branded reseller, a service provider (as with Virgin Mobile in the UK) or a real MVNO as Lyca Mobile is in some countries with its own tech foundation, such as the home location registrars.

The cost of building an MVNO can range from £10,000 for a branded reseller to millions in you’re creating a ‘real’ MVNO. The entrance barrier is not high. If the question is whether you can make money on an MVNO, that question is easy to answer, says Strand. You look at what it costs to get a customer and then you look at the revenue that the customer generates (ARPU) and then you look at margin and then you can calculate how long a customer needs to stay in order for you to become a positive business case.

Experience shows that it can be difficult or expensive to attract customers, which is why many MVNOs have a hard time. Experience also shows that those who survive and may succeed either attract niche segments with products that suit them (Lyca Mobile – cheap international calls) or that they sell business solutions with a combination of mobile, broadband and a virtual PBX solution or a IOT provider like Wireless Logic and Jasper Wireless.

Onfone successfully launched a real MVNO strategy changed the French mobile market irrevocably in a few days. Wherever there are dictatorial telcos that are opportunities.

In Sweden 22-year old David Lundgren Fetah started his MVNO on the basis that, as an experienced repairer of phones, he’d noticed that Swedes are want phones that don’t ‘cost the earth’, financially or environmentally. His new MVNO did one thing that the big mobile operators can’t ever do -  it joined the circular economy. Refurbly achieved 300% growth last year by giving subscribers used phones with cheap data plans and ‘circular phone insurance’. Users not only got a cheap handset, they got a better deal on data and a guilt free existence. In 2021 the word-of-mouth network reached former Telia Company CEO and GSMA  board member Johan Dennelind, whose reputation has helped attract inward investment.

The big MNOs in every country fail to take part in the circular economy because they are committed to mass consumption of the earth’s precious resources.Thye must keep us buying new handsets and sending more kids down mineral mine shafts in the Congo and cracking those whips in the slavish conditions of their handset assembly lines in China.

Oddly, when it comes to sustainability, old people may be the future. “People between 20 to 30 are far behind on the curve when it comes to refurbished devices. Even though young people are usually eco-friendly, they tend to buy newer devices as it can be regarded as a status symbol to have the newest phone,” said Lundgren Fetah.

In Oslo WG2 recently helped Kyocera to transform itself from print vendor to a private network provider. If an old printer giant can do it, anyone can. What does a genuinely creative service provider need to success as an MVNO, we asked or Odland at WGO. Is it a community or addressable group of people with something in common. Man United fans perhaps, or people who want to circumvent the NHS’s mysterious phone interface with clever apps? Is it technical knowledge they must covet, in order to span multiple areas of the telecoms stack? Or billions of Euros?

“It would be fair to say all of them,” says Odland, “What's important about the cloud, which is AWS in our case, is that we can spin up in new regions quickly, with a consistent, global codebase and with highest possible security standards.”

And be honest with the customers. It’s time to mature as a service so let’s bring some virtue to the virtual network.