However, there’s another interesting story MVNOs should follow. For the first time in its history, the archipelago of Channel Islands is close to launching its first MVNO in the shape of Coop Mobile. Again, all subject to regulatory approval, the launch would be a remedial action in the wake of the likely completion of Sure’s purchase of Airtel-Vodafone.

Why should we care?

It’s all about the development of an MVNO market and the innovation that could come from it.

 It’s worth a few facts at this point. The islands of Jersey and Guernsey are home to 170,000 residents spread across an area of 70 square miles. Each island is independently governed and has its own regulator for telecoms.

Unsurprisingly, the proposed merger of Sure and Airtel-Vodafone has attracted regulatory attention. Principally, the merger would leave the islands with just two operators, limiting consumer choice. If you’ve watched other mergers around the world play out (think Ireland and Austria) then you’ll know that’s a bug bear for regulators. Stands to reason, a merger will be scrutinised, and why there will be reviews on competition and choice. We know from other examples that this leads to interesting proposals. That’s why Sure has put forward the launch of an MVNO as part of its remedial plan. Maintaining a buoyant competitive market isn’t about sticking with the status quo. Innovation – in the form of new licences – can steady the helm. 

Let’s look at the context.

The reasons for the purchase of Airtel are not dissimilar to those proposed by Three / Vodafone in the UK. Airtel-Vodafone is unable to sustain operating costs especially those associated to updating the mobile networks across the two islands. Its decision to exit the island will bring home the reality that it was making a loss. (I can’t imagine it was an easy brand decision to make with the ‘heart’, but I’m certain the ‘head for numbers’ had the final say.)

 Nevertheless, the sale, if approved, leaves a gap in the market. It might be considered a small gap at this stage in the game but closing it with a keen MVNO should turn that assumption around.

Is this really going to happen?

I would say, yes. There’s a good line of retailers that have taken the opportunity to join the MVNO community, setting the precedent for linking a value offer with mobile and combining the wealth of customer insight with targeted propositions.  

Having consulted the Coop team on the negotiations, I’m very excited about the prospect. By applying for an MVNO licence in both islands, Coop can leverage its considerable retail estate as a distribution channel and talk to its 120,000 members using its credentials as a trusted brand. I’m confident it can offer a compelling alternative to the remaining incumbents.

It’s not a done deal, I admit. In Jersey, the Jersey Competition and Regulatory Authority (JCRA) have launched a public consultation process giving consumers a voice on the proposed sale and launch of an MVNO. But it’s a significant step and I would hope it lands favourably. The authorities on Guernsey are also reviewing the proposed remedies from Sure.

As industry experts, we know that MVNOs have proven to be successful at driving competition. Currently in the UK, around a third of all customer acquisitions go to MVNOs or challenger operator sub brands and, historically, retail MVNOs have proven successful. Retailers are trusted, have a cost-effective route to market and the ability to innovate the proposition by aligning it with their core activities.

Tesco Mobile, the UKs biggest MVNO, has been particularly successful in this regard leveraging the Clubcard scheme and its “Super Market Mobile” credentials, similarly Asda Mobile, iD mobile (by Currys) Superdrug Mobile and even Your Coop Mobile offer are all available in the UK.

In Germany, Aldi and Lidl also operate MVNOs and we are seeing retail MVNOs as one of the more successful early entrants to the MVNO market in places like South Africa with brands like PNP (Pick and Pay) and Shop Rite Knect rated as ‘favourite’ brands these days. 

You could say that the outcome of the application for a licence is in the hands of the public. And I think that’s good. In my experience, the public will want choice and will favour the underdog to give them something the other operators can’t. Of course, the regulators need to review other aspects alongside, but I suspect gauging the public opinion will help sway the vote.

As the year unfolds, I think we should expect an historic outcome for the Channel Islands, and I’d recommend MVNOs watch to see how the move is executed. There’s a lot to learn from other markets, especially so in fledging ones.

If you’re thinking about launching an MVNO in a new market or need to drive competition with a differentiated offer, then call me. My team can help you appraise the market, negotiate the deal, and build the winning business model.

The post Airtel-Vodafone takeover is not a Sure thing yet, but MVNOs could help seal the deal appeared first on Graystone Strategy.

One question I’ll be posing is whether MVNOs are really thinking through how customers are acquired and managed when the operator model depends on the use of digital platforms? The answer may seem obvious: simply build the comms channel into the apps and service models you design and launch.

It’s true that traditionally, conversations with customers have been led by customer acquisition teams supported by a great app or online UX experience. But I worry that just because the mobile industry has always done it that way, there’s an assumption that MVNOs must follow the mould.

I’d go as far as to say that MVNOs have to take a step back to survive the war on customer marketing. Customers like to use WhatsApp, Facebook Messenger, video. Some still like email and SMS. Customers might use them all every day, some might use a few. It proves no two people are the same.

We can’t assume a postcode, or a demographic profile informs how people will behave, shop, buy and request help. Everyone will interact with a brand differently depending on how they run their day-to-day life, the demands on their time, their income and prospects, and their communication preferences. And given all the different ways of communicating today, it’s genuinely surprising that the incumbent operators are still using email and SMS – I know because I’m always so surprised to receive a text from my provider!

MVNOs need to take a different view if they are to win share. Service models need to be organised differently.

This thought process has been confirmed during my time working with a Communication Platform as a Service provider (CPaaS). Fundamentally, telcos are falling behind other sectors like retail and are ill-equipped for having conversations with customers in a way that fits in with their life.

Persisting with text messages is not only out of sync with how I want to do busines but prompts another thought: SMS is easy and cheap to send so is this company really investing in getting their comms right and do they ‘get’ me?

I use WhatsApp, I use video, sure I still use voice, but I am ‘old skool’ as they say. But I also know I’m not alone. Plenty of other people are using this mixture of communication tools too. In the UK, 70% of people are now using video weekly, the biggest growth being in older people. Around the world 3.8 billion messages are sent over internet messaging platforms each day.

You can’t ignore stats like that if you’re a MVNO, especially as for most MVNOs, the core proposition is always focused on highly targeted and segmented bases. MVNOs need to put themselves in other people’s shoes. How do their customers talk to friends? Using that as a starting point can be so powerful in terms of developing not just a communications strategy but an omni-channel one.

What do I mean by that? Take Rich Communications Services (RCS) as an example. It allows brands to send a message that’s interactive. So, you can send a rundown of the best new handsets that customers can swipe through on a carousel and buy instantly, include links to start a chat with a chatbot on pricing (with the option to pass the customer on to a person), or include video content with a phone review. In France, where retailers are using this technique in Christmas campaigns engagement can be as long as three minutes!

The beauty of CPaaS means that companies can use a blend of communication methods but still have a single view of the customer. Whether they use What’sApp, Facebook Messenger of RCS to send the message, they can also see in real-time the levels of engagement campaigns are generating and adjust the tactics and content accordingly. Plus, they have the insight to plan future offers and campaigns more precisely. In turn, engagement scores and conversion rates improve, and operational over heads reduce.

I’ve always been a big believer in taking a different approach to segmentation but immersing myself in the world of CPaaS has been a real eye opener. It’s helped me see there are new and exciting ways of using marketing tech while reminding me of my deep-rooted love for effective targeted marketing.

I hope it won’t be long before we see communication platforms being used by MVNOs and sub brands via an MVNE. I’ll certainly be recommending it to those I work with because I think if they did adopt the approach, they’d see a fast ROI.

Overall, my lasting impression of this world is that any brand that remembers customers are not a homogenous group will not just win market share but also hearts and minds.

If you fancy a chat about who is doing it well and why, or any of the other hot topics that the symposium will cover, why not drop me a message?

The post Are MVNOs missing the point on customer comms? appeared first on Graystone Strategy.

Consumer customer growth will slow further

We’ve seen Covid-19 effect major launches so 5G handset supply was always going to be tricky this year, but this is quite a spanner in the works for any operator with desires to grow their 5G base in 2020.

It’s not helped by the fact that 5G is quite a niche proposition for consumers and that’s even for the really early adopters. We’re talking about the ‘Tech trailblazers’ (30% of the market) wanting 5G to begin with. That said, it’s not an insignificant number so the operators will have planned to attract them early to help showcase the possibilities, and get the revenue in the door. Their initial growth strategy will be pinned on business applications (see final point below) and these Trailblazers. But like 3G and 4G, 5G will go mainstream as more handsets become available and, in particular, once Apple is able to supply a decent quantity of 5G iPhones.

Network complications

Handsets is one thing, using it on a working network is another. This week’s decision will undoubtedly impact the speed of the rollout of 5G coverage. Networks have built plans around the availability and supply of Huawei kit, and now need to see if the more likely suppliers of Ericsson and Nokia through to re-emerging brands like Fujitsu, NEC and Samsung can help fill the gap.

Will they be able to make up the deficit quickly enough? My guess is it will be a perfect collision of not enough kit from any of them quickly enough, and delays on taking out the existing kit. That all adds up to a slower than planned growth of 5G coverage, and, as networks will ultimately need to extract the kit they have already installed, there will be disruption to existing 5G service.

Overall it’s going to be an interesting race between operators to change quickly and with limited impact to customer experience. And it’s a race it will be difficult to judge as networks seldom publish their plans in any great detail, so we won’t really know how they are progressing against the initial plan they had.

Will Customers pay the new 5G bill ?

The cost implications of replacing kit are most likely to be felt by consumers. The availability (or lack of) alternative base station kit may drive up market prices and therefore costs to deploy networks. Plus reversing out already purchased Huawei kit has a double whammy effect, the original investment is wasted and you are effectively installing, de-installing and re-installing which all has associated costs. That has to be financed somehow and while I don’t expect data pricing to go up I do expect data pricing to stabilise and the steady decline we’ve seen over the last couple of years slow down.

It’s very likely this will cause some networks to re-evaluate their 5G pricing strategy. Consumers should therefore expect 5G to be at a premium in terms of handset costs and possible the available tariffs for 5G.

But as ever, it always pays to shop around. MVNOs like Sky Mobile (on the O2 network) already have access to 5G and with recent developments in the MVNO and MNO market, and the announced merger between O2 and Virgin we may see some good deals in the short term.

What do consumers think and what will they do?

The news has made every front page and it’s likely consumers will now be concerned about buying Huawei branded devices as a result. They are likely to think more about the trade-offs than they usually would when investing in a new phone.

Huawei is likely to extend its range of very cost effective 5G devices competing against the more expensive Samsung or Apple (once available). It remains to seen whether price over perceived security wins out.

My hunch is customers will take longer to adopt 5G anyway, simply because we have a shrinking economy and people will be keeping an eye on their discretionary expenditure.

MVNOs left in the cold?

All the complexity in the practicalities of delivering 5G and the added pressure on economics might have mid-term consequences for MVNOs. The big question is will operators offer market parity to their partners? A delay in parity would help ensure 5G is synonymous with the big networks. Yet, MVNOs exist for the very reason that there are sets of customers operators will never reach. Extending 5G to MVNOs early (as some Operators have already done) could boost market traction.

It would not be a huge surprise if Operators take this opportunity to review the 5G MVNO strategy and whether they can delay MVNO access. Their cost base has changed significantly so the question is, do they drive for volume and include MVNOs or pursue a premium strategy for their direct customers only?

I imagine wholesale and finance teams are working intensely on business case calculations now.

Private networks may stall

Finally, we can’t look at the ramifications without talking about the impact on enterprise. This is where the real 5G business case lies, helping companies become more efficient and innovate. Any delay to 5G means a delay to some aspects of digital transformation, which is a strategic imperative at the moment.

The development of private networks, which is probably one of the most interesting use cases, will also take a hit. Private networks are not covered by the legislation but as Huawei has targeted this market and built some innovative RAN solutions I can see another potential problem.

All businesses are very concerned about security and data protection in line with legislation, and as a matter of reputational necessity, so I imagine any business in need of a private network, will be intently reviewing the perceived risk, seeking alternative suppliers and again increasing demand on more expensive alternatives to Huawei. The question is will that blow the business case?

As you can see there’s a lot at stake and as the points above show the strategic choices operators face are complex. From performing technical change through which propositions to define and price first, to whether to launch with MVNOs.

Few will have predicted the scenario five years ago, but real it is and it won’t be reversed. Navigating the short-term upheaval for long-term gain is now the name of the game.

If you need help working through your strategy in response to these changes then get in touch.

The post Six consequences of the Huawei ruling appeared first on Graystone Strategy.

Recent months have been about survival of the fittest. And while change is an accepted part of doing business, plans really have been turned upside down as the economy tanked, uncertainty dug in, and an ever changing set of rules came from the government.

This kind of change means that today’s issues, (which could quite literally have become very different to yesterday’s and are likely to be different again to tomorrow’s), become the talking point at the boardroom table. The long-term plan gets shoved aside.

It’s a really common behaviour at the moment. The ‘Covid effect’ boils down to obsessing on the here and now and not adjusting at the detriment of the long term strategic plans. Decisions are deferred, expenditure is questioned, cuts are made.

But as history can tell us, fortune favours the brave.

So, it’s no surprise then that despite the question mark over 5G’s relevance, Vodafone is still forecasting a big upside to 5G. True enough the cynical can say Vodafone has a vested interest in making 5G happen, but its whole approach to the pandemic has been one of accepting its role as a critical service provider and stepping up. It’s seen and helped demonstrate the bigger picture and provided the technology solutions and support to boot.

The alternative approach, which we’ve also seen in the industry, is to entrench. Reduce marketing expenditure. Furlough staff. Reduce service levels.

Setting aside the retail hardships, in an industry like telecoms such an approach can only lead to more misery – ultimately you lose momentum and catching up becomes much more challenging.

It’s a two-fold approach that’s needed: 1. Now, 2: next year. There’s an immediate need to look at the services 5G can help companies innovate and deliver tomorrow and react to what customers want now. As Peter Scott illustrates in this piece in The Daily Telegraph, understanding your service model and how people want to shop and buy a product can differentiate a brand.

If you can put someone in touch with an expert in a store by video you are helping them make better use of their time and feel secure about the choices they make and the brands they gravitate to. Your assistants are less exposed to risk and can do what they do best: explain and demonstrate the latest washing machine or smart speaker and close a sale.

But for me it’s not just about the technology, it’s about the attitude towards longer term planning. Now is the time for boards in retail, travel and utilities in particular to review their five year plan, use the intel they have gathered over the last few months, think about their customer segments again and, if necessary, alter course, make new investments and keep moving forward towards the vision.

We are still very much in the throes of a marathon when it comes to managing the pandemic. I’d therefore argue that 5G and the assorted technologies it supports, like AI, AR and VR, and M2M IoT, can help long-term recovery in so many ways. It shouldn’t be dismissed.

There’s much to gain from investing in this vision – more accurate billing, more varied and personalised entertainment and subscription services, smarter city living and travel options. The operators are starting to bring to life the possibilities and show how investment can deliver ROI quickly. Investing in collaborative trials and pilots is a definite option for the execs who are brave.

Yes, there are definite use cases to deliver today – there’s the urgent use case for temperature monitoring at tickets turnstiles and access gates for instance. But there’s also the longer-term vision for using 5G to enable IoT that can help with things that have hit the public’s conscience since lockdown, such as managing food security and supply chains, to greener living and everything in between. It’s a perfect PR opportunity to strike now.

To sum up, I would see it as an opportunity that only 5% of companies think 5G is more important and relevant in a CV-19 world. Those 5% are the brands that can see its potential and are the ones to watch. They are already rethinking their strategy and making the link between innovation and recovery. And I believe that it’s those companies that will become even more relevant to people and help them live better connected lives. And what’s more they will be the businesses that swerve becoming another casualty in the long-run.

The post 5G is less important now. What’s going wrong? appeared first on Graystone Strategy.

It was going to change the market. Of that there was no doubt, and moreover, it was a very interesting way to forge a partnership that brought mutual benefits, and still swerve the regulatory and CMA review.

But Friday’s news about a potential merger between Virgin and O2 completely changes the game and the market dynamics. Let’s look at the players:

O2 – a problem child

We know that Telefonica has been trying to work out what to do with O2 after the regulator and CMA blocked the merger with Three.

As a by stander, I found it all rather perplexing because previously the regulator had waived through a deal between BT and EE creating a huge telecoms market leader. How was this different? One can only assume, that at the time, the regulator did not grasp the fact that fixed, mobile and media were all rapidly converging.

So, O2’s needed to change tack, and as a result it’s been making some bold strategic moves. Only a month ago it pulled out of its partnership with the indirect reseller Carphone Warehouse, who, by the way, still sell all of Virgin’s products.

You can read more about my full analysis of that decision here, but what’s important to know is that the move opened up a gap – and Virgin is well placed to fill it.

A perfect match for retail, business and the channel

O2 has no broadband customers, nor a TV offer (if you don’t include Netflix and Disney et al) to offer retail consumers, so in partnering with Virgin it can move hook, line and sinker into multi-play.

In business, both organisations have established business sales channels and again the offering is largely complementary. I’d assume O2 takes the lead on mobile and private networks, and Virgin drives the fixed connectivity. This will be good news to the dealer channel too.

A more detailed look at the segments and why the deal makes sense

If we use the Graystone Strategy segmentation to look at the consumer profiles they both attract, then an interesting story pans out, namely they both over index in different segments.

Virgin Mobile has more than its fair share of ‘Service Seekers’, ‘Budget Balancers’ and ‘Settled Seniors’. Whereas O2 over indexes on ‘Digital Devotees’ and ‘Technology Trail Blazers’. It’s clear that there’s an opportunity for both parties to gain access to different segments and hence acquire incremental customers.

In broadband and TV there is opportunity too. O2 has more than its fair share of ‘Digital Devotees’ in its base and currently no TV or broadband offer to sell them.

Looking at the market at large, Sky over-indexes on ‘Digital Devotees’ too, for both TV and broadband. This means that a multi-play O2 / Virgin deal could win over Sky customers pretty swiftly. It also suggests that the O2 / Sky deal may have been cannibalising the O2 base moving O2 customers with a Sky account to Sky Mobile.

Virgin can take advantage of the network economies

In a merger, Virgin would benefit from full network economics – something that the Vodafone wholesale deal is unlikely to have unlocked, unless it was viewed as a highly strategic partnership and had some type of quid pro quo commercials in place.

Vodafone left in the cold

So, what of the wholesale partnership with Vodafone? If the O2 / Virgin deal goes ahead then obviously the Voda partnership will be voided. But I would be surprised if there would not be a pretty punitive cost to Virgin in tearing up the contract.

In some respects, the timing of this may be because Virgin needs to resolve this one way or another before it goes too far down the integration path. And of course, they won’t want to move their wholesale supplier from BT to Vodafone and then to O2. That would be far too much change and impact on customers.

Who will be the winners and losers?

We are many months off a competition review, but already we can make some assumptions about who are going to be the winners and losers in the market.

Losers:

1. Net loser – Vodafone, as it sees Virgin deal unravel…

Vodafone is likely to be a net loser. It had won a significant wholesale contract with Virgin, but as it unravels, even if there are clauses that allow them to recoup some of the margin, it will be worse off than they could have been. And I’d wager that’s even if the resultant impact on other MVNOs allows Vodafone to pick up some new customers.

2. …BT remains a loser

BT continues to be a long-term net loser. The biggest wholesale contract it had has walked away, and now, Virgin, as one of its biggest competitors has the potential to get access to MNO economics.

It also has the potential to give O2 / Virgin the number one spot in terms of mobile subscribers. O2 has always had a strong wholesale business, and a very effective wholesale strategy, and, in terms of wholesale and retail SIMs combined, they have been market leader. This would allow O2 to challenge the number one spot for retail customers as the Virgin and O2 customer bases would likely merge.

There may a short-term upside for BT. If the deal goes ahead, then migrating Virgin customers away from BT to O2 may take longer than it was going to take to migrate them to Vodafone. This gives some upsides in terms of wholesale revenues, and possibly a chance to take a premium! But it is really just sugar coating on the bitter merger pill.

3. … Three lagging their competitors with no fixed infrastructure

There’s no understating that Three will come out of this a loser. It’s the smallest mobile operator and only operates meaningfully in consumer, although it does have business and consumer MVNOs in their portfolio.

If the deal goes ahead then it further highlights Three’s biggest challenge: it does not have any fixed infrastructure and no major play for the home. Yes, the 5G mobile broadband offer mitigates this a bit, but it is far from mass market right now.

4. Sky probably a loser. Could it sell up?

It’s likely Sky will have clauses in its contract with O2 to safeguard change of ownership and potentially ‘exclusivity of category’. If true, it means they might seriously consider moving away from O2 pronto. That will not have been in its plans and will absolutely be a significant upset to its long-term strategy that will impact customer numbers.

Knocking on the door will be Vodafone, BT and Three, all keen to engage and encourage a move to their networks. This of course, could drive more favourable terms and bring an edge to the competition in the longer term, but it will also require a big change project.

Alternatively, and it’s a real longshot, but it’s not unthinkable that Sky might even sell its mobile base to O2. It’s not hard linked to broadband or TV but a move like that comes with some real risk specifically that any Virgin / O2 venture would seek to convert those acquired customers to Virgin TV and broadband.

Neutral:

5. TalkTalk could come looking for a deal

TalkTalk, is probably neutral at the moment. It walked away from mobile a while back, but it may be time to put on its best bib and tucker and see if there’s a partnership or acquisition option for it too. Definitely a space to watch.

Winners:

6. O2 and the consumer

O2 is very clearly a winner. It moves from being a mobile only operator in the market to join BT, which offers mobile, fixed and TV, and Vodafone with its mobile and fixed offer.

Consumers really luck out in the short term. There’s more choice for multi-play for sure. And with fewer organisations in general to buy mobile from, I suspect retention and acquisition offers will be good. But long term, I think it will shift to a more neutral position for consumers.

Virgin brand in flux

Let’s not forget this has ramifications for the Virgin brand full stop. With sell offs happening all over the place, it screams for another piece of analysis on the future of the brand, so look out for that soon.

How should the market respond?

In the meantime, bearing in mind the regulatory hurdles, I’d be advising all operators to be taking a good hard look at their segments, and analysing how well their propositions attract the bullseye and compete as the dynamics shift. We now know O2 is up to something so if this doesn’t pass, you can expect it won’t be dissuaded from trying another strategy. Either way change is coming and preparation will be everything.

If you want to talk the implications through further, specifically for your business, or re-evaluate your segmentation then get in touch. I’m not going anywhere for the foreseeable!

The post Virgin and O2 are in detailed discussions. Here’s my 360 view on things. appeared first on Graystone Strategy.