Building a Telco 2.0-Compliant MVNO

I have been talking to several middle and senior managers at mobile operators around Europe in recent weeks and the overall mood is grim. Several are sitting on or waiting for redundancy packages (which are generally quite generous), but most are not positive about securing another job within a competitor. The 'musical chairs', where employees could walk out of one operator and into another, of the last few years has come to an end and lots of people are wondering what they are going to do in the future.

Despite the bleak prognosis for many MVNO's, as blogged by Om Malik amongst others, many coming out of mobile operators are considering a move into this area as a way to leverage their existing skills and earn an honest crust.

This got me thinking: what would a Telco 2.0-compliant MVNO look like? We have already blogged and covered in our manifesto and report in detail about how the integration of handset, UI, Services and Network is breaking down and how this will continue in the Telco 2.0-world. The premise for an MVNO start-up would thus be about customer control and choice versus traditional operators: the ability to choose any handset, customise your own UI and select own and third-party services.

I have jotted a few thoughts down below for a prospective Telco 2.0 MVNO. Please feel free to throw stones or, better still, come up with an alternative. The key assumption is that you do not have a bundle of capital to build infrastructure and market a brand. Rather than KISS, the CASH (Conserve All Spondoolies Herbert) principle applies.

Would this model make money? Don't know, there is not much new here except the concept of putting it all together and focusing EXCLUSIVELY on customer control and value, but if anyone nicks the idea then I want 5% of all revenue achieved.

Background

  • UK Mobile players battling for unique position in mind of consumer - high advertising but low differentiation = lots of noise:
    • Vodafone (formally positioned as quality premium brand) now premium + innovation (live!) + value & simplicity (Stop the Clock, Vodafone Simply) + instant gratification (Now!) - all for essentially same product
    • Orange used to be positioned around optimism (The future's bright...) but now lots of mixed messages
  • Growth in Young (16-35 year old) consumers with strong digital skills (web, mp3, mobile, pc) who are seeking control, participation (not passivity), flexibility and value with communications:
    • E.g. Big rise in social networking sites with user-generated content - MySpace, YouTube etc. where people exchange content and communicate
  • Under-served Corporate market (larger SMEs through to Nationals) also seeking greater value from and control over mobile voice and data.
  • Result is customers are confused, irritated by lack of control (contract lock-ins, hidden handset "subsidy" costs, little web self-service options), feel ripped off (stung when out of contract, locked in to high prices as prices move down for new customers)

Positioning & Customer Targets

  • Customers are Young 'Digital Kids' (16-35) and central corporate purchasing depts for larger SMEs and Nationals
  • Position in mind of customer is 'you are in control' of your mobile:
    • HANDSET: Get the handset you want free of any operator controls/portals/UI
    • PAYMENT: Transparent up-front or hire-purchase agreement for handset - nothing hidden; Pre- or post-pay options for services; Payment linked to usage NOT to predetermined contract bundle - no contract lock-ins
    • PRICING: Low-cost and prices reduce whenever market prices reduce - not locked in to high prices
    • ACCOUNT MANAGEMENT: Manage everything on-line - billing and payment, service activation etc.

Overall concept

  • Range of handsets - off the shelf from manufacturer
  • Customers buy handsets upfront OR via transparent high-purchase scheme over 12 months (this is the ONLY contract customer enters into).
  • Prepay or a 'NO CONTRACT' postpay - customer pays for what is used each month (same attraction as prepay but no top-up hassle). Really SIMPLE approach: handset selection & payment + pre/post payment choice = core service proposition
  • Most services automatically provisioned for use - e.g 'pay-as-you-eat' data package is available for all for web-browsing/email. Alternatively, customers select all-you-can-eat data service for monthly flat fee.
  • Same price on pre- and post-pay for minutes, texts, data etc. Any price reduction affects WHOLE customer base - nobody locked in to high-price contract
  • SIM-only option available - customers simply sign up for pre- or post-pay service and number is ported over
  • Prepay service via Paypal, Postpay via direct debit
  • Maximum customer control over account via web self-service for billing, activations:
    • Big benefit for Corporates wishing to manage purchasing centrally but control usage by dept/cost centre - numbers linked to cost centres through web interface.
  • Potential deals with Skype, M$ to offer VOIP and IM clients (subject to operator agreement)
  • Prices driven down by lowest-cost position:
    • 100%(?) web self-service - provisioning, customer service, billing. E.g. Drop-down boxes available for configuring Email solution on mobile for all major email accounts BUT no Email set-up support for exceptions.
    • Inbound email and IM customer service only - customer service issues simplified by single price plan, no airtime contract, simple and separate handset hire purchase, automatic/web provisioning of services.
    • Fulfilment for handset/SIM is outsourced and customers cover postage costs
    • Outsourced customer storage and processing infrastructure using Amazon's S3 storage service EC2 CPU processing capability as described so eloquently by Thomas Angelero in his Telecom Tsunami blog
    • Outsourced billing capability
  • Additional revenue-generating options - suggested to customer at sign-up or personalised and pushed at customer on mobile or web (when they top-up bill, change service options):
    • (Outsourced) handset insurance option
    • Other hardware sales - mp3, Slingbox (latter for offering Mobile TV service at transport cost - flat rate all-you-can-eat monthly payment) etc.
    • Accessories sales (Why not get a ... for your phone)
    • Content download channel for catalogue owner - film/music/other content (poss ad-funded)
    • xDSL sales (either as distribution channel or reseller for a ULL provider or BT), assuming (a) market matures (lower customer service issues) and is (b) attractive (ie can make money out of a paid service)
    • 'Click to recommend a friend' and receive £x off your bill if they buy a handset or sign up for service

Marketing - critical 'make or break' area

  • Low-cost viral Web 2.0 approach - blogospheres, get young film-maker to shoot quirky, humorous films of customers losing control of mobile and turning to the MVNO - "Take Control of Your Mobile..." and post on MySpace, YouTube etc.
  • Paid search and contextual ads on Google etc.
  • Email and SMS blasts - opt-in, of course