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Growth in the Mobile Virtual Network Operator (MVNO) market continues apace with analysts predicting that their combined subscriber base globally will exceed 186 million by 2015. This business model offers exciting opportunities to either enter the telecoms market or to grow your footprint in it – and its potential is not restricted to the Consumer market. Converged telecoms, machine to machine and “over the top” technologies such as Voice Over IP (VOIP) are bringing new potential to the market.

But beware of the pitfalls: almost 25% of all MVNO’s have either ceased trading, or have been acquired (often by their host operator) following poor market take up or poor financial results.

CGI has successfully implemented over 20 MVNO in the UK and Europe, and in this paper we highlight the three questions that will define the success of your MVNO venture.

What is your USP?

For an MVNO to be successful in a mature market, it needs to focus on a particular segment of the market and have a clear differentiator. As of October 2012, there were over 600 active MVNOs worldwide, with the majority of these focused on the consumer market with low cost as their unique selling point (USP). As MVNOs become more and more targeted, price does not have to be the only USP – a critical first step in your MVNO journey is to work out this “value proposition” for the market and its implications on how you set up your business.

How do you make money?

Now that you have a clear idea of how you are going to stand out in the market, it’s time to think about your business model – ie how you will make money:

  • What tariffs and handset subsidies will you offer?
  • How will you acquire your customers? Which channels will you use and what is your commissions strategy?
  • What will your cost to serve be? How can this be minimised?
  • How can you cross-sell with other products and services in your portfolio?
  • How can you deliver disruptive services bringing together your existing products and services into a new paradigm?
  • How can you trade-off between capex and opex to balance your commercial risk?

These questions feed into the design of your MVNO solution, and need to be considered for each part of your operating model. Careful design of the business model will have a strong influence on the business case and choice of technologies to deliver it.

Have you chosen the right technology?

Choosing the right network and technology solutions is key to making your business model work. The technology choices you make will determine how fast you can launch and how responsive you can be to changes in the market.