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Now that you (hopefully) put together all of the pieces of your new MVNO, how do you make all of the parts work and talk to each other?
There are six (6) Key Components to making your MVNO work from an operational standpoint. I’m leaving out sales and marketing for now (but will re-visit at the end of this article) as sales and marketing are the two main reasons that one enters the MVNO space. Differentiation and Distribution, remember?
So, let’s visit the Six Pillars of Operations.
1). An MVNE Platform
The Mobile Virtual Network ENABLER provides network infrastructure and related services such as OSS/BSS to enable MVNOs to offer the carriers’ service to their own customers. The MVNE does not have a relationship with the end users, it sits in the background providing connectivity between all of the parts necessary to add a customer, provide care to the customer, make changes to their service, etc.
2). SIM Providers
If you’re looking to get a quick start in launching your MVNO, you’ll need to realize that there are specific lead times for what type of SIM card you will need. Typically, if you are going direct with the carrier, you will need to be assigned a individual SKU for your MVNO which could take 4-6 weeks for manufacturing and testing. If your MVNO desires to have specific artwork and packaging (vs. a plain white card), the total waiting time could be as long as 12-14 weeks. If you opt to go through an aggregator, the lead time is much shorter but adding artwork and packaging will still add time. Some MVNOs launch with a plain white card and then move into a customized version. Expect customized SIM orders to have minimum purchase quantities of 10,000- 25,000.
3). Billing Platforms
Billing Platforms are usually part of the MVNE but some MVNO operators choose to handle their own (like customer service below) or outsource to someone other than their MVNE. This is a decision that rest solely with the MVNO but it is critical to make sure that any billing system is compatible with the MVNE and can properly charge the right amounts, so you are not losing revenue, or even NOT billing your customers like a long gone MVNO did years ago!
4.) Handset Logistics
I advise every client and wanna-be MVNO looking to enter the MVNO space to stay away from the handset business, unless you have the scale to put on hundreds of thousands of subscribers, can buy directly from Apple and Samsung, and have a stomach for everything associated with providing handsets (i.e. pricing, distribution, returns, etc.). My recommendation is to enlist the help of a third-party handset provider that will deal directly with your customers and even provide financing. It’s a very simple set up where customers on your website can simply shop for a handset (and accessories) and when clicking a button, are sent to the handset provider’s website. The handset provider will fulfill the order and all of the business transactions are between them and the customers.
Now, larger MVNOs who have dealers obviously want their stores to carry inventory and usually assist in supplying them. But for start-ups, limited capital should be spent on other areas to drive your business and not in inventory that may sit on the shelves for weeks.
5). Customer Service
I have worked with many firms that have started MVNOs that already have large bases of customers in broadband, fixed wireless or other subscription based products and have existing customer care facilities. Most start-ups, though, have zero experience in one of the most important parts of your operation; retention and solving subscriber’s issues. Outsourcing is a great option when starting out and many of the outsourced customer care companies also offer outbound selling along with inbound care calls. Many MVNOs go this route and finding an experienced call center that has wireless experience is not a difficult task.
Okay, Onto The Most Important Part:
6). Regulatory Attorney
I’ve saved the best for last. While technically not an operations item, it is absolutely critical to find yourself a very competent REGULATORY ATTORNEY. If you aim to be a full MVNO; that is, be registered with the FCC, own your customer base, collect and remit taxes and be responsible to keep up with every regulatory and legal change that happens in the wireless business, you cannot go this route alone. There are forms to complete and licenses to acquire. Months of red tape can be cut short by having an expert handle all of this for you while you concentrate on everything else related to getting your MVNO up and running. A good lawyer isn’t going to be cheap ($250-$400 per hour) but you must look at this as an insurance policy to avoid issues down the road.
It's That Easy…… Let’s Go!
Even those who have mastered the Six Pillars of Operations need to fully understand the risks in starting an MVNO. Not everyone is a Mint Mobile, Consumer Cellular or Ultra Mobile. Boost Mobile, Metro by T-Mobile, and Cricket Wireless are all backed by large carriers. Entrepreneurs that have started successful MVNOs did so by boot-strapping their operations, were tough negotiators and had a vision. They also were aware of the risks as many brand name MVNOs failed miserably, most notably, Disney, ESPN and Amp’d Mobile.
What Are The Risks For Those Starting An MVNO?
I asked our virtual friends at ChatGPT what risks exist for those starting an MVNO. He/She said,
Telecommunications is a highly regulated industry, and navigating the regulatory landscape can be complex. Compliance with local, national, and international regulations is crucial. Failure to comply with these regulations can result in fines and legal consequences.
Dependency on Host Network:
MVNOs rely on agreements with host network operators to provide services. If the relationship with the host network is strained or if the host network faces technical issues, it can directly impact the MVNO's ability to deliver services.
The telecommunications industry is highly competitive, with established players dominating the market. MVNOs face challenges in differentiating themselves and attracting customers in a crowded marketplace.
Lack of Control Over Infrastructure:
MVNOs do not own the physical network infrastructure. They lease network capacity from existing carriers. This lack of control can lead to limited flexibility and potential service disruptions if there are issues with the host network.
Changing Technology Landscape:
Rapid advancements in technology can pose challenges for MVNOs. Staying up-to-date with the latest technologies, such as 5G, and adapting to these changes may require significant investments.
Customer Acquisition and Retention:
Acquiring and retaining customers can be challenging, especially with strong competition. Offering attractive pricing plans and excellent customer service is essential, but it may not guarantee success.
Economic downturns can impact consumer spending on telecommunications services. MVNOs need to be prepared for fluctuations in the economy that could affect their customer base.
Marketing and Branding:
Building a recognizable brand and marketing effectively are crucial for success. MVNOs need to invest in marketing strategies to stand out in the market and attract customers.
Technology and Security Risks:
MVNOs handle sensitive customer data, and they must invest in robust cybersecurity measures to protect against data breaches and other security threats.
Scale and Economies of Operation:
Achieving economies of scale can be challenging for smaller MVNOs. Large carriers often benefit from scale advantages that allow them to offer competitive pricing.
In closing, before starting an MVNO, it's crucial to conduct thorough market research, assess the regulatory environment, and develop a comprehensive business plan that addresses these risks. Seeking legal and industry expertise can also be valuable in navigating the complexities of the telecommunications industry.
Atrium Unlimited Consulting has deep experience in launching MVNOs and guiding them through the hurdles outlined above. If you want more information or want to take the leap, contact us at atriumunlimited.com/contact.