opinion


White label, sub brands and MVNO, what is the right model?

A smiley-face colorful balloon surround by grey balloons to illustrate the 'stand out from the crowd' concept

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Lynda Burton, Director of Wholesale at Three UK, discusses white labeling, operator’s MVNO and diversification strategy.

There will be many interesting debates happening at MVNOs Europe this November. One of the most fascinating will be on the future of sub brands and the value they will bring to an operator’s MVNO strategy over the next three to five years.

We’ve seen two significant launches this year: SMARTY by Three and Vodafone’s Voxi. It’s evidence that operators still need ways to diversify through multiple brands if they are to appeal to customers they wouldn’t otherwise attract. It’s an extension of the widely held belief that MVNOs are crucial for stretching a network’s assets. Of course, the case for sub brands remains simple and compelling – create a brand you control as an operator, and target specific customer segments. It limits the risk of cannibalisation and provides economies of scale as the sub-brand operates within the operator.

All of the best practice, systems and commercial relationships can be easily harnessed and exploited. SMARTY exists for this very reason and has been a commercial success as a result. But success is always hard fought. Launching a new brand requires precision marketing, and well-negotiated channels to market. These are overheads that don’t come cheaply and can potentially undermine the savings and aspects of control that such a ‘parental’ arrangement has.

It’s why traditional MVNOs still have their place in our market. Granted the argument that revenues are naturally lower does exist, but people often overlook the fact that the marketing costs are lower too.

iD by Carphone Warehouse is an example of an MVNO getting the balancing act of investment in infrastructure and marketing spend right. Its customer numbers show that there is room for MVNOs in the market, announcing 800,000 customers with plans well underway to hit 1 million. All healthy incremental customer numbers for Three.

CPW knows what its customers need inside out and has built a service that is differentiated and targeted. It’s taken full advantage of its existing distribution strength and combined it with Three’s award winning network, and ability to deliver innovative MVNO services such as VoLTE and voice and text over wifi.

But the setup and ongoing investment in the infrastructure to support an MVNO can be high, and Three has seen that there is a better way…

What is it? White labeling.

The best example is Superdrug, which launched 3 months ago and  is leading the way on the win/win of a white label platform.  In this new white label model, the systems and technical relationships are managed by the operator. It takes the heat out of the expense of set up, and frees up the cash to get the proposition and marketing just right. In short, the risk diminishes.

As such, Superdrug was in a strong position to take full advantage of our experience of taking new brands to market and combine it with its very powerful customer loyalty programme and distribution network.

Superdrug understood what its customers wanted from its wealth of customer insight and developed a service it knew people would buy, and rewarded them when they did. And in turn, it gave the board assurances that the business case could and would work.

Is there a retail board that would turn down the chance to extend its well-loved brand in such an economical way? White label MVNOs are a very interesting and exciting way to compete in the current tough trading circumstances.
It’s these pressures brands face to improve revenue and keep customers loyal that will drive the MVNO market over the coming year. In particular, we’ll see brands realise that they can achieve their goals via a white label partnership. Brands, which have all the kudos but struggled to make the MVNO numbers work before now, will see there is a viable way to make their brand work harder.

We’ll see the existing MVNO brands re-evaluate their approach to running a network and switch their models to white label services to cut costs.That’s where the real debate will be and it’s the operators who are most in tune with these evolving dynamics that will win out.

 

A headshot of Lynda Burton, Director of Wholesale at Three Mobile UK and speaker at MVNOs Europe 2018Lynda Burton is Director of Wholesale for Three UK, she owns MVNO, white-label partnerships, bulk messaging, carrier services and international roaming functions. Lynda has led Three’s rapid growth strategy in wholesale which has included delivering the UK’s fastest growing postpaid MVNO, iD Mobile, winning B2B MVNO Gamma Mobile and providing the connectivity solution in the UK for Google’s Project Fi MVNO. She has also driven the delivery of innovative new services including OTT virtual numbers that allow appVNOs, high bandwidth IOT solutions and supporting Three’s Feel at Home roaming proposition with unrivalled cost economics.In June 2018 Lynda announced a new white label partnerships model that allows brands to launch MVNOs simply and with limited investment in technology, the first brand to launch was Superdrug Mobile.Prior to heading up the Wholesale division, Lynda was Director of Programme and Operations. She has extensive experience in the telecommunications market across both the UK and Australasia.

Hear from Lynda at the MVNOs Europe 2018, taking place in London, 6 – 7 November 2018. Book your tickets now.


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