Will MVNOs live long and prosper?


A sci-fi MVNO? That's an idea that might live long and prosper

Everyone seems to be setting up an MVNO (mobile virtual network operator) these days. Supermarket retailers (think Asda Mobile or 7-Eleven Speak Out Wireless).  22-year old college students (“It was just one of those things…” explains John Mardini, founder of Voyager). And now both Apple and Amazon are rumored to be interested in the MVNO model as well.

So why do they all believe there’s enough business going around for everyone?

First of all, an MVNO is a cell phone carrier (usually offering prepaid) which doesn’t have its own network infrastructure and licensed radio spectrum. Instead, it buys minutes at wholesale prices from a larger mobile network operator, and then sells these minutes on at retail (usually cheaper) prices under its own brand. This means that interestingly, the MVNO is therefore regarded as a reseller and a customer of a mobile network operator – it’s not seen as a direct competitor.

The second reason is that some MVNOs are cleverly targeting niche markets that traditional service providers have either neglected, or can’t cater for properly. Take sports for example:

Ok, the idea of an MVNO (Soccertel) that revolves around your football/soccer club is definitely an unusual example. I’m not a fan so it doesn’t really appeal to me.

But since I’m a parent with young children so much more interesting and relevant to me would be bemilo.

While there have been attempts to target the youth market by Virgin Mobile and Disney Mobile too (everyone would say they want to target and cater that age group), but how about younger kids? bemilo in the UK offers exactly that, allowing parents full control over the usage their kids have on the phone.

One niche market with massive potential is the migrant segment:

Since one in every 35 people is now an international migrant (according to the BBC), it’s no wonder then that MVNOs are trying to cash in on this trend, the UK being a prime example:

China Telecom is launching an MVNO in the UK called CTExcelbiz using Everything Everywhere’s network. Its unique selling point? It’s all in Chinese for Chinese people living or visiting the UK –  from their website, voicemail services and bilingual contact center reps, to their long-distance calling package for connecting with friends and family in China.

AfriMobile in the UK is another new MVNO. This one targets a similar audience with a focus on “an African business”.

Informa analyst Francesco Radicati regards the market shifts in the UK as “part of the move toward globalization: a patchwork of MVNOs reflecting the UK’s cultural mix”.

And the target market numbers are impressive: with CTExcelbiz, Radicati estimates a potential market of around 500,000 customers of Chinese descent, in addition to the estimated 1 million Chinese tourists who visit each year.

And let’s not forget our grandparents: If we can target kids, then why not the other end of the spectrum as well? The US company greatcall caters for senior citizens and have expanded their services for keeping you “safe and healthy” to include specialized mobile apps. But where they excel is through the integration of a personal emergency response system.

The idea of MVNOs isn’t new. But what is new is this shift from being a “just” a prepaid solution to a service that fits into unique market niches– you could even refer to them as “tribes”. In such cases, their offering doesn’t just rely on being a reseller of another network operator, but rather on providing a unique service for their target market segment.

I wonder what’s next… How about a sci-fi MVNO for Star Trek fans?

5 Comments

  1. Posted June 6, 2012 at 4:31 am | Permalink

    Thanks for the link to my blog post – I think a good indicator of your argument that MVNO providers are increasingly chasing more clearly defined niches is in the ethnic segment. For several years in the UK, the ethnic/international calling segment has been dominated by LycaMobile and Lebara, but now we’re seeing a variety of new launches targeting, as you mentioned, Chinese or African consumers, as well as Polish, Bangladeshi, and Middle Eastern users.

    The way they target these niche markets is increasingly based on services beyond the traditional cheap calling minutes – for example, Vizz Mobile’s offerings for African, Afghan and Sri Lankan callers allow users to transfer calling credit to other mobiles.

    And the idea of a Star Trek MVNO isn’t so far-fetched – in my blog I mention Fenercell, which is aimed at fans of Turkish soccer club Fenerbahce. Fenercell has not only launched in its home market of Turkey, but also offers services in Germany, to let fans support their club from abroad. That’s a pretty unique market niche…

  2. Posted June 6, 2012 at 4:45 am | Permalink

    Francesco,

    Thanks for the additional insights – these are some very good points.
    If you’re up for it, I’d be more than willing to start that Stat Trek MVNO initiative with you ;-)

    Regards,
    Tsahi

  3. Francesco Radicati
    Posted June 6, 2012 at 1:43 pm | Permalink

    You’re on, Tsahi – and if we do, hopefully Paramount will let us bring back the tricorder app… :)

  4. Posted June 25, 2012 at 12:10 pm | Permalink

    Tsahi –

    You are correct, there are still many good opportunities for MVNOs if they are executed correctly. We launched kajeet – the smartphone for kids(tm) – in the US in mid-2007. Our success with this youth-focused service stemmed from focusing on service differentiation and efficiency. This led us to using our platform – branded Arterra – to help others launch their own MVNOs; so we are now also a Mobile Virtual Network Enabler, which means others can leverage the efficient and sophisticated platform we built for kajeet, and our deep expertise in running a successful MVNO. We believe there are many opportunities in the market for our MVNE services.

    Best, –Daniel Neal, CEO & Founder, Kajeet, Inc.

  5. Posted November 22, 2012 at 1:54 pm | Permalink

    I personally think that MVNO is the future of mobile.

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