It was an enormous pleasure to be invited by Informa to run some MVNO Masterclasses at its recent MVNO World Congress in Brussels.
In total, the Graystone team ran three masterclasses, scoring on average 4.9/5 to 5/5 on likelihood to recommend the classes to others.
The distances attendees had traveled was quite astonishing. Every corner of the globe, and every life stage of MVNO, was represented.
It was a strong reminder that although the MVNO model is well established in Europe, there are still many markets that are at the start of their journey and need expert knowledge and experience to guide their strategy.
The standout class in terms of diversity, focused on building a partnership with your host MNO.
The binding operator agreement is the most important partnership agreement for any MVNO to sign, and experience tells me that it can define the success, and sometimes failure, of MVNOs.
During the course of the conference, in quiet corners and in hushed, and sometimes embarrassed, tones, I heard catastrophic tales of MVNOs that did not pay attention to their partnership and terms of their contract and who now find themselves in very dire straits. Consequently, there are now people knocking at our door asking for help to avoid being the next anecdote.
On the flip side, there are MVNOs that have built an incredibly positive relationship with their partner host operator. Strategic goals are aligned and there is a mutual, 100% commitment to joint success.
But I think the really interesting insight came from new markets. I had underestimated just how much help new entrants need from specialists. There is a lack of skill on the ground for them to turn to and often, because the concept is so new (in local terms) there’s not even knowledge within the operators themselves.
Every MVNO and MNO can learn from our discussions in the masterclasses. Many think MVNOs magically appear overnight. They don’t. There’s an extraordinary amount that must happen – there’s a real art to getting one to the point of signed contracts, let alone to market.
What I took away from the event was that there is little unified clarity on what ‘good’ looks like.
I’ll take Nigeria as a great example of this conclusion, but I hasten to add, it is by no means alone.
The market has licensed just under 50 MVNOs across a range of license classes and technical models. This approach has meant that there is at least some sort of blueprint for the technology build that everyone can align against.
But when it comes to the commercial constructs, the wholesale contracts and how wholesale and MVNO should work together it is almost a blank piece of paper.
On the one hand MVNOs have a lot to do, building their proposition, their tech, their brand and distribution models. But MNOs who have never done wholesale are in a similar boat.
They also need to build out their commercial approach, API access, commercial contracts, support teams etc for MVNOs, all with distinct information barriers between their wholesale and retail business.
I’ve seen this blank page scenario before, and generally it leads to an enormous amount of frustration from licensees, because it seems impossible to get a credible deal and contract from an MNO.
In Nigeria, I hear stories of an extraordinary situation playing out. To get things done, the MNOs are asking the MVNOs to tell them what to draft into wholesale contracts, simply because they don’t know where to start. MNOs are assuming that the breadth of conversations MVNOs are having with technology suppliers, gives them enough knowledge to shape the contract. But the truth is, MVNOs are none the wiser. The phrase, blind leading the blind, comes to mind.
The takeaway should not be about who is to blame for this situation, but instead, MVNOs cannot happen magically. The levels of negotiation that are involved really aren’t for the faint hearted. I know from doing it on behalf of MVNOs and MNOs that they are complex to arrange and therefore agree.
I’m not only referring to the commercials and structuring the contract. Agreeing how you will run your wholesale team is also complicated.
There are a lot of decisions that the MNOs need to make about strategy, everything from information barriers between teams, through how they will technically wholesale the network, to how they will resource the support that the MVNOs need, provide the wholesale billing technology and how they ensure that there is separation between their retail customers and their wholesale customers.
It took a lot of work to deliver this for Vodafone back in 2006, and even after it was delivered, we only took on maybe three to four MVNO projects a year maximum. Pace is not on your side when it comes to MVNO deals.
Imagine having to do all of that with no guidance, no instruction book and probably 50 organisations beating a path to your door asking you what the answer is and wanting to negotiate with you?
In the case of Nigeria, not unreasonably, the MVNOs are expecting the MNOs to lead this. They are the telecoms experts, they are selling a wholesale service for commercial gain in a competitive market, and they have a responsibility to the regulator to deliver.
So how to square the circle? It’s my firm opinion that MNOs need to have a cohesive wholesale strategy to support this regulated change. They need to invest in teams and technologies to facilitate that strategy and deliver against their regulatory requirements. And if they can’t source expertise and experience locally (difficult as no one has done it, or Globally if they are a group company) then they need to seek external expert help.
There is no shame in that. It’s the smart move and will give any MNO that does it, the first mover competitive advantage. They will avoid costly mistakes and benefit from global best practice.
Our masterclasses are just the tip of the iceberg when it comes to helping both MVNOs and MNOs unpick their options and progress strategically. If you’d like to know how we can help you specifically, then contact me.
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