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Last time I wrote about Things to Know Before Starting an MVNO. Now I'm going to take you through the process of actually starting one.
A mobile virtual network operator (MVNO) is a wireless company that does not have its own wireless network infrastructure, like the towers owned and operated by AT&T, T-Mobile and Verizon. MVNOs enter into a business agreement with a mobile network operator to buy access to the network at wholesale cost, then they set their own retail prices independently for talk, text and data. Some MVNOs have their own customer service, billing systems, and marketing and sales departments, while others engage with a mobile virtual network enabler to provide such functions.
What You Need To Get Started With Your Own MVNO
Starting your own mobile service sounds daunting, but it doesn’t have to be. Creating your own private branch exchange (PBX -- a telephone system within an enterprise that switches calls between enterprise users on local lines while allowing all users to share a certain number of external phone lines) used to be a large undertaking, but now launching a PBX is cloud-based and easy. The mobile and wireless industry is going through a similar shift today.
Let’s look at highlighted areas above and discuss how to get started.
- An MVNO does not have its own wireless network infrastructure. The towers that are used to carry wireless calls, text messages and data are owned by AT&T, Verizon, T-Mobile and US Cellular. Dish has also promised to build a 5G network from the ground up. You as an MVNO simply use their networks and sell your services under your own brand name to your targeted audience.
- Entering into a business Agreement with a Mobile Network Operator. The main component to start an MVNO business is permission to provide such a mobile service using the carrier’s existing infrastructure. The Big Three carriers have slightly different approaches in signing on new MVNOs but all will require a solid Business Plan, proof of extensive funding and most importantly a commitment to purchase and deliver on significant financial and activation targets. Sprint was the most aggressive in bringing new MVNOs into the market but since the 2020 acquisition by T-Mobile, the opportunity has somewhat changed. From my last article:
T-Mobile recently appointed three aggregators to handle smaller MVNOs and newcomers to the market. Aggregators like these companies give the option of handling everything from soup to nuts, ranging from simply taking leads and doing sales, to fulfillment and all backroom activities, to letting the new MVNO operate as a standalone, performing all of the functions listed above.
The three aggregators that T-Mobile is using as of today are:
- Plum (https://.plum.mobi)
- Prepaid Wireless Group (PWG) (https://pwgnetworksolutions.com/)
- Plintron (www.plintron.com)
Some of these aggregators also support Verizon and/or AT&T in their offerings. More on this later.
- The MVNO sets retail prices independently. The relationship between the MVNO and the Carrier is unlike most business relationships. As an MVNO, the carrier is both your business partner and competitor. Trust needs to be a major part of dealings as you are basically “opening your books,” strategies and methods of operation to your competitor. Obviously, the carrier is using MVNO distribution to reach markets quickly and easily that they previously may not have engaged with. But they are also doing so to MAKE MONEY! That is why it is so important that your MVNO has a Differentiator so you are not competing on price alone. Whether you market to a specific ethnic or age group, certain international markets, or a new, untapped market; your focus need not completely compliment the carrier, it must add value so there is a peaceful co-existence between the parties.
- The MVNO could employ the services of a mobile virtual network enabler. In many cases, the carriers are either not interested in bringing on more MVNOs or make the barriers to entry so egregious that it is impossible to commit to them (for example, asking you to activate 50K-75K new subscribers in a short period of time or purchasing X amount of airtime in bulk), forcing you to look at other options. Luckily there has been an explosion of Mobile Virtual Network Enablers (MVNEs) and companies that offer a MVNO Program in a Box that will let you get started quickly and with much less of a financial commitment. These companies have made major commitments to the carriers with regards to the volume requirements started above and bring on dozens of smaller MVNOs to succeed with their own businesses. Some of the current players in this space are Reach Mobile (https://www.reachnext.com/) ; Telgoo5 (www.telgoo5.com), MVNOU (https://mvnou.com/) and others.
They will provide you with a turn-key solution with a step-by-step process on how to enter the market and will handle a lot of the backroom operations for you, giving you time to focus on your core target of subscribers and build relationships with your customers. Most represent one or more of the Big Three carriers so shop wisely as going this route will definitely add expense and cut into your margins. And, leave yourself an “out” if you want to eventually go directly with a carrier once you have demonstrated the ability to acquire, service and retain a large number of subscribers.
Again, do your homework to find the best solution for you or reach out to us to help you with your search. While we can’t endorse one over another, the folks at Atrium Unlimited Consulting (https://atriumunlimited.com/) know a lot of these players and can help guide you based on your specific needs and market preferences.
Have A Business Plan
Your business plan is the blueprint for your success. Whether you go directly with the carrier, an aggregator or an MVNO in a Box company, they will want to know your plan; how will you come to market, what is the source of your financing, how will you differentiate yourself from the dozens of existing MVNOs and resellers currently operating? And, will you target a regular Unlimited Talk, Text & Data user or go the machine-to-machine/Internet of Things (M2M/IoT) route.
In any scenario, your Business Plan will have to address your ability to plan for how you will reach your target segment of customers, how to get your message to them, and how to package your offers and services. Once you have this, you’ll need to demonstrate how you will accomplish the necessary marketing and technology tasks to run your business and what internal support groups are needed to be successful including:
- Branding, pricing, differentiators.
- Choosing a handset provider, ordering SIM cards.
- Developing a portal for activations and subscriber maintenance.
- Marketing, Financing, Customer Service and of course…….. Sales.
Quicker, Easier and Cheaper?
If I haven’t scared you away yet, and you still want to be an MVNO but are simply scared to death about biting off everything listed above, there is an easier route to take, that of going through an aggregator or the MVNO in a Box solution (see point #4 above).
You can usually pick from an ala carte menu on what will provide for your needs and have less of a commitment and investment than if you were to go directly through a carrier. The possible loss of margin (based on a slightly higher cost than going directly with AT&T, Verizon, T-Mobile) should be offset with a tremendous savings on the back room activities listed above. It’s worth checking out to get a turn-key solution in a very short period of time, or, again, let us help you on your journey.
There Are Many MVNE Choices for You, Here is Just One
One such MVNE that I speak with regularly is Reach Mobile. Reach CEO Harjot Saluja shares with me that “When creating a MVNO, dedicate time and resources to strategize on the unique selling points and differentiators to attract customers. There are tools, including Reach Mobile’s Digital Operator Cloud, that empower you to launch a service without a single engineering source. Lean into these cloud-native tools that allow you to launch an MVNO quickly with minimal resources and technical talent.”
“Once the MVNO is up and running, it’s important to not forget about supporting it. Many MVNOs falsely assume their existing systems will be the right fit. Reach Mobile’s end-to-end back office portal support arm is as elegant as the consumer experience. Agents are empowered with the tools to solve almost any problem without having to elevate it.”
Ready, Set, Go!
It’s decision time. What’s your differentiator? What’s your niche market? How will you distribute? When you boil it down, there’s really only three things you need to be successful in the MVNO space. And you can choose to develop two of those things in house if you know how, or use a third party to provide those services like the ones discussed in the article. Everything can fall under:
- A Network (you’re virtual, so you don’t need one, but choose the one that’s right for you)
- IT and connectivity
- Customer Service
How do you get there? Smart business people have figured it out, so can you. Let us help when you feel overwhelmed or don’t know where to start. Remember,
- Be in it for the long run.
- Surround yourself with people who know the business, not family and friends (unless they meet criteria number one).
- Have the financial resources to weather any storm.
- Try to be different. I can get unlimited talk, text and data anywhere, why should they buy from you?
- Dot your i’s and cross your t’s. Have a great lawyer who knows the business. Most importantly, know and understand what you are signing. AT&T, T-Mobile and Verizon employ a lot of lawyers, get commitments and terms and conditions up front!
The carriers do have wholesale departments setup that you can reach out to, to get started such as https://wholesale.t-mobile.com/ for T-Mobile, and https://www.business.att.com/industries/wholesale.html for AT&T, and https://www.verizon.com/verizonpartnersolutions/homepage for Verizon. But, it's my experience that carriers don't want to establish direct relationships with new MVNO startups, unless those involved with the MVNO have industry experience and a proven track record. So, for most looking to get started in the industry, it would be better to start your MVNO through an MVNE, Aggregator, or MVNO in a Box Solution. Of course, you are also welcome to reach out to me at Atrium Unlimited Consulting or [email protected] for further help on how to go about this.