Prior to his attendance at this year’s MVNOs World Congress as a speaker, the MVNOs Series team spoke with Gary Bhomer. Read the interview to find out his thoughts on the current business opportunities for wholesalers, where revenue growth is likely to come from and much more.
What new business opportunities are emerging in the wholesale market?
The MVNO market is typically characterised by a lack of differentiation with a focus on price and data inclusions. A large majority of plans are now including unlimited voice, SMS, MMS and even International calls. In this world of commoditisation Operators with big wallets are seeking to differentiate via acquired content, like sport, entertainment or music, and MVNOs typically struggle to get access to premium content (or handsets) due to commercial or strategic reasons.
MVNOs are however in a unique position in that they can tailor their proposition to their unique target segment. We have seen this effectively played out in certain segments, e.g. Ethnic segment via Lebara and Lycamobile and the youth segment via MVNOs like Gift Gaff (UK), Simyo (Spain) and Boost (Australia / US). The key to their past and future success lies in a very targeted customer proposition designed for their specific niche demographic distributed via the most appropriate channel strategy for that segment.
In some markets, including Australia, developing a proposition specific to your target segment is challenging to execute due to restrictive operator commercial structures. MVNOs typically have to lock into their retail proposition, with a limited number of pre-defined plans which ultimately limits the ability of the MVNO to innovate and differentiate. The timing is therefore ripe for digital disruptors to enter the telecommunications market, putting the customer in control, and providing the flexibility and empowerment they seek, rather than being locked into pre-defined plans and tariffs.
Where is revenue growth likely to come from in wholesale?
In my opinion the new business opportunities will come from MVNOs that adopt a digital first strategy. MVNOs are typically not encumbered by legacy BSS / OSS systems and are in a unique position to offer superior customer service and to give the customer more control. We have seen these types of offerings in other markets, like IDMobile in the UK, Circles.Life in Singapore and more recently Yoodo in Malaysia.
These offerings put the customer in control where they can personalise their own plans, set their own spend limits, change tariffs in real time and share balances with other users. They are less reliant on pre-defined plans that may not be suitable for an individual’s unique and changing needs. Customers are also in a much better position to service themselves directly, or via social channels, rather than being subjected to “cookie cutter” customer service models.
We have already witnessed massive digital disruption in other markets like the hotel, taxi and media industries via the likes of AirBnB, Uber and Netflix respectively, and it’s only a matter of time before the same evolution takes place in telecommunications. First mover MVNO’s, supported by like-minded operators, will be the winners, whilst the rest of the market falls behind and tries desperately to keep up.
“Digitisation is a step change even greater than the internet. Exponential technology advances, greater consumer power and increased competition mean all industries face the threat of commoditisation. The winners will act now, and build a strategic advantage that leaves their counterparts wondering what happened”, Ernst and Young – The digitisation of everything, How organisations must adapt to changing consumer behaviour.
There’s no doubt digitisation will have a massive impact on the traditional telecommunications market. We have already witnessed first movers with digital customer offerings in certain markets. The quote above from Ernst and Young is very timely given the relative inertia in the telecommunications market and the digital possibilities that now exist.
What’s the impact regulations such as Europe’s Roam-Like-Home could have in the Wholesale market globally?
Markets outside of Europe have typically not been impacted by the changes in European Roaming regulation. Customers outside of Europe are still subject to relatively high roaming costs which creates an opportunity for MVNO’s to offer alternatives such as unlimited global Wi-Fi propositions as those networks increasingly become more ubiquitous.
Wi-Fi can also be a great opportunity for MVNOs more broadly in a domestic context. We have already observed Wi-Fi successfully complementing cellular offerings in other markets with the likes of Mobilcom-Debitel in Germany and Republic Wireless in the USA.
How is increasing digitalisation likely to affect the wholesale market? Will it alter the relationship between MVNOs and MVNEs, or perhaps make the boundaries between them more fluid?
Digitisation has had a significant impact on MVNE and BSS offerings. Digital MVNE / BSS platforms are available via an outsourced real-time cloud environment. This frees up the MVNO to focus on sales and marketing whilst having their technology needs delivered “as a Service” and via a dedicated state of the art digital platform. The relationship between MVNOs and MVNEs is therefore likely to be much stronger as MVNEs will be in a unique position to enable the level of innovation and differentiation necessary to succeed, in an agile and cost-effective manner.
Where do you see the opportunities in IOT and how can telco operators compete with the new players in the connectivity market?
IOT is already changing the way we work, rest and play and we will no doubt experience exponential growth in this space especially as eSIM and 5G networks come into play. This creates a fantastic emerging opportunity for MVNO’s and MNO’s. The same principle applies to traditional MVNO models where the MVNO can be nimbler and more targeted on a specific niche.
Traditional MVNE’s are also launching IOT capabilities which opens up a new and fast-growing market for them and their customers. The IOT market is likely to be much more fragmented than traditional telecommunications, and a huge area for growth where MVNOs can deploy innovative and targeted service offerings in a flexible and innovative manner.
Lastly, IOT connectivity is likely to be much more diverse and open compared to the domain traditionally controlled and managed by incumbent network providers. Alternative network technologies are opening up the connectivity market, including narrowband networks like LoRaWAN and Sigfox, new nano satellite and Multefire deployments, which will all in time, challenge existing network providers, creating a more diverse and open playing field.
Meet Gary Bhomer at the MVNOs World Congress 2018 where he will deliver a presentation on ‘MVNOs as an innovation hub to streamline end to end acquisition’.