Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Christopher Lycett, Portfolio Manager for the MVNOs Series sat down with Hamish Cummins, Head of Pre-Sales at MDS Global to discuss the market opportunities for MVNOs in 2021 and beyond.

Does 5G pose a real opportunity for MVNOs?

Without a doubt as it is a completely different style of network, capable of providing a completely different style of service. The issue for MVNOs looking to unlock that opportunity is that it is also going to require a new way of thinking and working.

A virtualised network, as planned with standalone 5G, offers MVNOs the opportunity to effectively have their own private network delivering a range of services that can become their unique brand differentiators. A true virtualised network should be agile in terms of configuration and relatively low-cost to set up. As a result, MVNOs will finally have the ability to really differentiate themselves from other players in the market.

We liken it in some ways to the power of AWS suddenly arriving in the mobile network. True 5G is a combination of connectivity, storage and computing power – both in the core network and at its edge. Of course, there is still plenty of work to be done before we see full rollout – with network slicing and guaranteed service level corridors – but once they arrive, MVNOs will be able to tap into that AWS-like power to unlock market opportunity.

In particular, the enterprise market is not very well served when it comes to specialised services. It hasn’t been efficient for the operators to address it economically and they have largely left the field open to their reseller market. MVNOs can exploit this gap and are nimble enough to support a new era where specialist services are co-created with enterprise customers.

Is the enterprise space well served by MVNOs and is there an opportunity for them?

Many service providers focus on medium to large businesses that demand traditional big-ticket enterprise solutions, leaving the SME market largely underserved or supported by the reseller and VAS market. In many ways, it is the sheer scope, diversity and collective scale of the SME market that makes serving it such a challenge.

The advent of 5G networks opens up enormous market possibilities for start-ups and businesses looking to create new connectivity-based products for global markets – especially in a space like the IoT. MVNOs have the opportunity to co-create these specialist services with business domain experts, within vertical market sectors and ecosystems. Partnering with what we are terming ‘business curators’ in this way will help MVNOs knowledgably target a wide range of vertical market opportunities.

There is no shortage of B2C MVNOs targeting the intensely price-competitive mass consumer market, but very few are offering specialist B2B services, and even fewer are looking to partner with other B2B vertical market experts to add enhanced services and value to their specialist offerings.

Do you think this opens the doors for the SuperMVNOs (such as Google, Samsung and Apple) who may offer devices with embedded connectivity?

There’s certainly no reason to think otherwise. Internet giants like Google, Facebook and Netflix, or the dominant device vendors like Apple and Samsung, will surely recognise that specialist 5G services can also serve as specialist enablers for their products and services.

There’s little doubt that the 5G era could herald the end of the dominance of selling connectivity itself as an end product. Instead, it could be superseded by the concept of selling embedded connectivity in a diverse range of business and consumer products and services.

For example, global players like Google, Amazon and Netflix have services that rely on connectivity to perform. Any innovation that can enhance, and effectively privatise, that connectivity for a specific service can be positioned to improve and strengthen the appeal of their overall offer.

What can really make a difference to successful MNO/MVNO business models and help make an MVNO more successful?

As in many walks of business life, it really all comes back to the brand. What’s changing is that previously in the MVNO market, brand was primarily about recognition and trust – rather than specific market skills or services.

It goes without saying that recognition and trust remain important qualities but with true 5G networks, an MVNO’s brand could also relate to very specific products or services – such as dedicated gaming solutions or a speciality in fintech services.

And as highlighted above, it could be all about the ability to work with specialist business service curators to design and provide highly individualised vertical market offerings. This is all very different from traditional MNO or MVNO brand presentation.

Take our work with VADSA in South America: VADSA is an example of a business curator helping companies to launch as MVNOs with specialist market services. VADSA’s first launch is Exis Telecom which has arrived as a specialist MVNO selling personal security solutions and a range of fintech services.

What will be the impact of eSIM for MVNOs?

The rise of eSIM removes friction from the sales chain and aids the adoption of digital-first relationships and improved customer services and engagement.

If MVNOs harness this digital power correctly, they could capitalise on viral social media and digital advertising to significantly reduce the cost of customer acquisition while at the same time boosting their rate of customer acquisition. That’s the good news.

The flip side is that any unchecked drop in customer service levels could result in an unwanted and dramatic rise in churn rates facilitated by the eSIM approach. This issue would apply in both direct and indirect channels and also to enterprise and IoT deployments.

Ultimately, eSim is a great tool for bringing customers online. Keeping these customers onside is a customer service issue and any unhappy customers will leave the network, regardless of the presence of eSim technology.

Is digital the only way to go? Is physical dead in today’s world?

People still buy from people, but physical and digital sales channels will merge. A digital approach makes the people-to-people engagement smoother with less friction, less scope for error, and less complexity.

Our MVNO customer in Malaysia, redONE, experienced 28 per cent growth in 2019 boosted by its range of value-added digital services covering health care, insurance, credit cards, social media and music. All of redONE’s products and services are available to buy online, but the network also boasts a physical channel of some 2,100 neighbourhood centres or shops where it has 15,000 trained field agents. These agents can sell the online service and get customers connected straightaway.

In a consumer-friendly ‘digital-meets-physical’ innovation, prospective customers looking to switch to redONE can use an app to request a visit from one of the field agents – much like requesting an Uber ride. The nearest agent simply visits the customer and helps them sign up on the spot.

Is it possible to be 100% digital in terms of customer engagement today?

It is certainly possible and depending on the business model it can also be a successful and highly profitable route to market. A digital-only approach can also be supported by little or no above-the-line advertising but still spread very quickly though viral marketing.

By committing to a website and app-led approach to marketing and customer service, it is possible to quickly grow and support a customer base with an operating expenditure at a much-reduced level compared to standard routes to market.

The UK’s first 100% digital MVNO was iD Mobile. It added 300,000 subscribers in its first 15 months with an intelligent digital offering that focussed on customer service. It put its customers in control via an app where they could personalise their plans, view charges, set limits and share credit and data balances between users. With free data rollover, and instant tariff updates, the network appealed to a customer base demanding flexibility and control of their services and spend.