White label, sub brands and MVNO, what is the right model?

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Lynda Burton, Director of Wholesale at Three UK, discusses white labeling, operator’s MVNO and diversification strategy.

There will be many interesting debates happening at MVNOs Europe this November. One of the most fascinating will be on the future of sub brands and the value they will bring to an operator’s MVNO strategy over the next three to five years.

We’ve seen two significant launches this year: SMARTY by Three and Vodafone’s Voxi. It’s evidence that operators still need ways to diversify through multiple brands if they are to appeal to customers they wouldn’t otherwise attract. It’s an extension of the widely held belief that MVNOs are crucial for stretching a network’s assets. Of course, the case for sub brands remains simple and compelling – create a brand you control as an operator, and target specific customer segments. It limits the risk of cannibalisation and provides economies of scale as the sub-brand operates within the operator.

All of the best practice, systems and commercial relationships can be easily harnessed and exploited. SMARTY exists for this very reason and has been a commercial success as a result. But success is always hard fought. Launching a new brand requires precision marketing, and well-negotiated channels to market. These are overheads that don’t come cheaply and can potentially undermine the savings and aspects of control that such a ‘parental’ arrangement has.

It’s why traditional MVNOs still have their place in our market. Granted the argument that revenues are naturally lower does exist, but people often overlook the fact that the marketing costs are lower too.

iD by Carphone Warehouse is an example of an MVNO getting the balancing act of investment in infrastructure and marketing spend right. Its customer numbers show that there is room for MVNOs in the market, announcing 800,000 customers with plans well underway to hit 1 million. All healthy incremental customer numbers for Three.

CPW knows what its customers need inside out and has built a service that is differentiated and targeted. It’s taken full advantage of its existing distribution strength and combined it with Three’s award winning network, and ability to deliver innovative MVNO services such as VoLTE and voice and text over wifi.

But the setup and ongoing investment in the infrastructure to support an MVNO can be high, and Three has seen that there is a better way…

What is it? White labeling.

The best example is Superdrug, which launched 3 months ago and  is leading the way on the win/ win of a a white label platform.  In this new white label model, the systems and technical relationships are managed by the operator. It takes the heat out of the expense of set up, and frees up the cash to get the proposition and marketing just right. In short, the risk diminishes.

As such, Superdrug was in a strong position to take full advantage of our experience of taking new brands to market and combine it with its very powerful customer loyalty programme and distribution network.

Superdrug understood what its customers wanted from its wealth of customer insight and developed a service it knew people would buy, and rewarded them when they did. And in turn, it gave the board assurances that the business case could and would work.

Is there a retail board that would turn down the chance to extend its well-loved brand in such an economical way? White label MVNOs are a very interesting and exciting way to compete in the current tough trading circumstances.
It’s these pressures brands face to improve revenue and keep customers loyal that will drive the MVNO market over the coming year. In particular, we’ll see brands realise that they can achieve their goals via a white label partnership. Brands, which have all the kudos but struggled to make the MVNO numbers work before now, will see there is a viable way to make their brand work harder.

We’ll see the existing MVNO brands re-evaluate their approach to running a network and switch their models to white label services to cut costs.That’s where the real debate will be and it’s the operators who are most in tune with these evolving dynamics that will win out.

 

A headshot of Lynda Burton, Director of Wholesale at Three Mobile UK and speaker at MVNOs Europe 2018Lynda Burton is Director of Wholesale for Three UK, she owns MVNO, white-label partnerships, bulk messaging, carrier services and international roaming functions. Lynda has led Three’s rapid growth strategy in wholesale which has included delivering the UK’s fastest growing postpaid MVNO, iD Mobile, winning B2B MVNO Gamma Mobile and providing the connectivity solution in the UK for Google’s Project Fi MVNO. She has also driven the delivery of innovative new services including OTT virtual numbers that allow appVNOs, high bandwidth IOT solutions and supporting Three’s Feel at Home roaming proposition with unrivalled cost economics.In June 2018 Lynda announced a new white label partnerships model that allows brands to launch MVNOs simply and with limited investment in technology, the first brand to launch was Superdrug Mobile.Prior to heading up the Wholesale division, Lynda was Director of Programme and Operations. She has extensive experience in the telecommunications market across both the UK and Australasia.

Hear from Lynda at the MVNOs Europe 2018, taking place in London, 6 – 7 November 2018. Book your tickets now.

Q&A with Lynda Burton, Director of Wholesale at Three

With less than ten days until the MVNOs Europe 2018, the MVNOs Series spoke with Lynda Burton. Director of Wholesale at Three, Lynda owns MVNO, white-label partnerships, bulk messaging, carrier services and international roaming functions. In this interview, Lynda shares her predictions for 5G, its benefits to customers and partners, and the most exciting use cases. 

What are your predictions for 5G and what benefits will it bring to operators’ customers and partners?

We see the launch of 5G as a significant impact upon the market and one from which Three intend to get maximum advantage. We have more 5G spectrum than any other operator and with our plans for a fully virtualised network well advanced, we will be able to leverage all the benefits of 5G. Thanks to the rollout of 5G, our spectrum and new technologies like Massive MIMO, our network will be able to support almost thirty times the data that it does today – that means we can bring on more customers fully exploiting our wholesale business opportunities. It is really exciting for our team.  It also opens up new connected customer verticals, connecting people to people, people to things, and things to things in both business and consumer segments.

Can you also tell us a bit more regarding 5G use cases? Why MVNOs should be excited about it?

In the short term 5G is going to allow customers to do more of what they are doing now but much faster. In the consumer space this could mean a far superior low latency gaming experience and removing the need for fixed broadband – so few millennial customers value their fixed line, it is the natural progression for them to become a fully mobile connected household.
Longer term we see a significant opportunity in connectivity for business applications, whether that is connected health, car or other industries that need high bandwidth, low latency services, or the IOT applications where there are many millions of devices utilising the network.

Finally, our fully virtualised 5G network will allow “network slicing” effectively allocating portions of the network to a particular organisation or vertical. This is cutting edge stuff and the use cases are not fully defined yet, but because of the investments we have made in 5G we have the capability and can work internally and externally on how we bring it to market.

How are networks getting ready for 5G and how that includes MVNOs? i.e. Will operators ensure MVNOs have access to their wholesale 5G networks?

Operators across Europe are working on their 5G plans. At Three UK we have been planning meticulously for 5G for a long time. Our network and IT transformation, moving us to a completely new and fully virtualised core network, increasing the number of data centres, adding new mobile backhaul with SSE and redeveloping our IT systems, is progressing very well. When completed the core network we are building in partnership with Nokia will be a world first. Without this you cannot fully leverage all the capabilities of 5G. We have already secured more 5G spectrum than any other operator and this opens up a significant opportunity for us.

With regards to our MVNO partners, they are already briefed on our 5G strategy and we are continuing to update them. Historically Three UK has always offered our MVNOs network parity with Three Retail and this means that in the future MVNOs will be able to access 5G. We had the same approach to 4G access.  This was quite different to the approach of other operators who sought to retain premium services for their own retail customers, giving MVNO customers a more basic service – some of the larger MVNOs only gained access in the past two years. We don’t believe that holding new technologies back from our partners is a model that works. If we help them to grow, we’ll grow and that’s the model we will bring to 5G.

How can operators help their MVNOs to face the changing ecosystem? i.e. Are operators willing to reduce their wholesale rates if RLAH has a profound impact on their MVNOs’ businesses? Will operators be more flexible and work with MVNOs to negotiate their roaming deals?

That’s a lot of questions! Certainly at Three UK we have always had a flexible approach to working with our MVNOs, whether that is technical or commercial models. We believe that our success is driven from our MVNO’s success, so we are always open to having a dialogue if an MVNO needs our support, and that is on anything not just RLAH. We like to work out challenges together, we really do see our MVNO relationships as partnerships.

With regards to whether we would negotiate roaming deals on an MVNO’s behalf, we already offer a managed service on roaming for our MVNO lite customers, leveraging our roaming relationships with over 190 networks globally.

How do operators tackle the increased data demand from their customers?

Three’s own retail customers use more than 3x the average data consumption each month and our customers have recently voted us the best network for data. Delivering high speed and high bandwidth is our heritage – our network was designed for data.  All the projections have data demand growing exponentially over the next 5-10 years and 5G will help us manage that capacity in a cost-effective way.

What are your views on delivering a fully digital MVNOs? What do you consider the pros and cons of this model?

There a couple of ways that an MVNO could be considered fully digital, it could be that the MVNO can only be accessed via digital channels. So, customers buy online, access their account online and are served through online channels such as webchat. I definitely believe that for the right customer segments this is a model that really works. We only need to look at many of the other digital services like Netflix and Spotify to see that consumers are comfortable in buying service in a 100% digital channel, and I think it’s an area where we will continue to see growth. Obviously, there will be some segments of customers who prefer a face-to-face service, or the ability to call a call centre for help. In the short terms these customers are unlikely to want to migrate to a fully digital experience. But this is at the core of the MVNO ecosystem. MVNOs target different customers segments and offer them an experience which is differentiated from the mass market and serves that customer segment’s needs.

The second way an MVNO could be considered fully digital is if all the calls are handled through digital channels, in app calling, sometimes referred to as AppVNOs. Three offer a product that supports this model, our OTT virtual numbers. This allows organisations to set up a mobile calling experience within an App, for example if you wanted to have a mobile number in a dating app. It’s relatively early days for the product but we are seeing some interesting use cases and as always we are keen to exploit new technologies and ideas for our wholesale customers.

What are the best strategies when approaching customers via new channels? How can MNOs and MVNOs develop and implement their digital strategies better?

Accessing new customers through new and different channels is critical to the success of an MVNO partnership. Our recent partnership with Superdrug is a great example of this. The relationship enables Superdrug to add new benefits to customers within their loyalty scheme giving them a fantastic mobile offer and double loyalty points on all their spend in Superdrug.  For Three, we get to bring new and extremely loyal customers to our network through an entirely new channel.

In the Superdrug example we are using both retail and digital channels, all the joining journeys can be undertaken online, including setting up your SIM after buying it in a Superdrug store. The online account web pages and web help allows customers to service their account and get help through flexible and lower cost digital channels. Much of the infrastructure that supports this has been developed by Three as part of our white label platform, while Superdrug bring their outstanding understanding of their customers and how best to target and sell to them through stores and digital loyalty media. It’s an exciting proposition and opens up more opportunities for brands who may not have considered their loyalty scheme as a channel for telecoms services.

What are your views on network virtualization and its impact on operators?

I have already mentioned that virtualisation is crucial to fully leveraging the benefits of 5G but there are other enormous benefits that it will bring. It will allow us to be far more agile, delivering change in the network faster and ultimately allowing us to develop new products and services far faster than the competition, reacting to the ever-changing demands of our retail and wholesale customers. In short it will give us and our partners a significant competitive edge.

Automation is a key part of our network virtualisation story that will enable many activities that are manual today to be automated in the future, as well as providing instant self-healing capabilities improving network availability and reliability.

Hear from Lynda Burton at the MVNOs Europe 2018, taking place in London, 6 – 7 November 2018. Lynda will deliver a presentation on ‘Preparing for 5G – setting your MVNO up for 5G success’. Book your tickets now.

Connecting devices: Could iSIM be the key to opening up the IoT?

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Freelance Technology Journalist Kate O’Flaherty offers an in-depth analysis on iSIM, launched by ARM earlier this year. What is it, how does it differ from eSIM, and how will it impact the market?

This year’s saw ARM take aim at the internet of things (IoT) with the launch of iSIM technology – an integrated component built into the same chip as the processor. In many ways it’s similar to eSIM, but because it takes up less space iSIM is ideal for tiny IoT devices.

Among the advantages, iSIM lowers costs for multiple players in the IoT supply chain. It is cheaper than eSIM, because there is no need for an extra chip. In addition, there aren’t any assembly steps, and it results in fewer devices in the supply chain, reducing hardware manufacturing costs as a result.

Ease of integration is another factor that makes iSIM stand out: It reduces complexity because the modem and Sim card are “under one roof”, so there’s nothing for the device maker to integrate, Eden Cohen, senior product manager at Qualcomm, says.

ISIM technology offers multiple benefits for all players within the IoT space, according to Alex Gledhill technical specialist at Intel: “ISIM provides flexibility in business and deployment models, enables more services, simplifies OEM logistics, eliminates sku proliferation –  and there is a lower bill of materials cost, in particular for low power technologies like narrow band IoT (NBIoT) and Category M (Cat-M).”

This is because iSIM is more power efficient. Indeed, the lower price and ease of use associated with iSIM could easily be applied to smart meters or connected cars “where we need high security and low cost”, says Vincent Korstanje, vice president and general manager of the Secure Identity line of business at ARM. “A smart meter needs software updates, but this doesn’t need to be fast,” he points out – which makes it an ideal use case for iSIM.

ARM is predicting that 15% of all IoT devices will have cellular connectivity by 2025. The technology therefore opens up multiple opportunities for operators, because they will potentially see more IoT devices connected to their networks as a result.

Taking this into account, iSIM will also offer interesting use cases in the consumer IoT space, says Korstanje’s colleague, product marketing director Loic Bonvarlet. “This area is really a premium and iSIM might bring new interesting use cases from saved power and space – such as wearables and things integrated into clothing.”

Asset tracking and connected spaces offer more possible use cases for iSIM. “These use cases require a small module that is low cost,” says Korstanje. “When firms are able to track pallets around the world, they can keep a good eye on where things are and therefore improve efficiency.”

At the same time, iSIM can also be used in high end devices, says Gledhill: “For high end devices, iSIM can enable vertical applications such as payment, identity and digital rights management.”

Challenges

It is clear iSIM offers great potential to help drive the growth of IoT, but there are obstacles to be overcome. Guido Abate, STMicroelectronics international standards manager and the GSM Association’s RSPTEST Chair, points out that eSIM is “much more mature than iSIM”.

Gledhill agrees, saying iSIM is “in its infancy” and needs mass market adoption. “To achieve this, it requires system on a chip (SoC) integration, certification process enhancement and an ecosystem that provides the same level or better security than the traditional Sim.”

Remy Cricco, chairman of the board at the SIMalliance says the group’s members are observing “strong technological and business trends” supporting the continued growth of the ecosystem.

However, he adds: “As long as there is demand for strong device and service security – which SIMalliance sees as gaining even more relevance with society becoming increasingly connected – the provision of secure OS and subscription and data management services, remote provisioning capabilities and a comprehensive understanding of mobile operator requirements will be essential.”

Indeed, the standards for eSIM are already underway, with several devices already incorporating the technology. But to a large extent, iSIM can use the existing eSIM ecosystem and back-end infrastructure, says Gledhill.
At the same time, he says, security and certification challenges need to be addressed to satisfy MVNOs’ and mobile operator’s requirements.

But ARM points out that iSIM is in itself very secure. ARM’s iSIM offers its own low footprint OS, called Kigen, which runs on a CryptoIsland secure enclave. This means the Sim identity, a microcontroller and a radio modem can be embedded on the IoT SoC.

This is fully partitioned from the rest of the SoC, with self-contained processing and encryption elements running a secure operating system.

But despite this, Korstanje agrees there is more to be done. “We need to work hard on the standards side, but it’s not massively different: The software stack is the same,” he says.

The future

It’s early days for iSIM, but its future is looking very bright, with devices appearing as soon as next year. According to ARM, iSIM will appear from early 2019, with more announcements due in the first quarter of the year, ramping up for full adoption in 2020.

Meanwhile, Qualcomm says it is planning to offer iSIM within connected PCs running on its Qualcomm snapdragon processors set to launch in 2019.

Other technologies will also help fuel the use of both iSIM and eSIM in devices. For example, Gledhill thinks 5G will be an accelerator for the embedded Sim market. Gledhill explains: “Simply put, 5G will connect more devices – including low power IoT devices, cars, and PCs and tablets – to operator networks.

“This means more deployment and enablement of Sims on various existing and new technologies. It will drive new models and the user or enterprise has the ability to move between networks without physically changing the Sim card. This is particularly useful when applied to IoT devices in the field.”

As the ecosystem matures, there will be many more opportunities for both MVNOs and mobile operators that wish to play in the IoT space. But this will also put pressure on carriers to ensure their networks are up to scratch and able to handle potentially billions of additional devices over the next few years.

Meet with ARM, SIMalliance, G+D and many other eSIM innovators at the e-SIM Connect 2018, taking place at the ILEC Conference Centre in London – 6 – 7 November.