Why brands are at risk during MVNO launches

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By: Wise Marketer Staff |

Posted on August 4, 2005

Major brands including mass-market retailers, TV networks, youth-oriented content providers and ISPs are putting their brands on the line by launching virtual mobile phone companies, according to a white paper published by business and technology consulting firm DiamondCluster.

The white paper, entitled 'Your Brand, Unplugged: A Strategic and Structured Approach to Launching an MVNO', explains the potential pitfalls a brand may come up against when becoming an MVNO (Mobile Virtual Network Operator) - a common tactic employed by many major brands to add extra revenue streams by 'piggybacking' mobile services onto the brand's existing popularity.

Potential dangers
But while an MVNO can produce attractive economic returns and deepen relationships with customers, a failure to develop and execute a successful strategy can not only be embarrassing but also be financially devastating. "Launching an MVNO is much more complicated than a popularity contest," explained Hamilton Sekino, a partner in DiamondCluster's telecoms practice. "The main reason why MVNOs fail is because of poor launch planning and execution. It will take flawless execution to meet customer expectations."

Global opportunities
According to Sekino, even the strongest brand with the best strategy could still fall short of a perfect launch if the company cannot deliver a unique value proposition. In short, it's becoming an increasingly crowded market, and both differentiation and worthwhile value are necessary to succeed. But while countries with comparable purchasing power such as Italy, the United Kingdom and Germany, have reached very high mobile penetration rates (80% to 105%), the US market current stands at only 65%.

Moreover, US wireless carriers have yet to fully embrace service personalisation, and DiamondCluster says that customers there are hungry for compelling content that's customised to meet their needs and match their personal interests. The white paper estimates that there will be some 30 million MVNO subscribers in the USA by 2010.

Doing it right
In the white paper, a four-step plan for successful MVNO execution addresses the key components of designing a wireless entry strategy, and identifying an under-penetrated market (for example, untapped groups in the USA currently include children, the elderly, fashion-conscious females, ethnic groups, day-traders and even keen gamblers).

The firm recommends that brands wanting to enter the MVNO space should carefully consider which network host and enablement providers they partner with. Costs, long-term commitments and the importance of quality make the selection of a network host critical. According to the white paper, new MVNOs should consider prior experience, commitment to wholesale business, pricing, support, network capabilities, technology and handsets. And the back-office operations of an MVNO will also contribute to variable costs and impact the quality of the customer experience. Consequently, a well informed selection of enablement providers is also critical. Again, new MVNOs should consider prior experience, the platform, the overall offering, and pricing.

Careful planning
The paper also recommends that the launch planning process should produce a 'launch book' - a detailed plan identifying the strategy, work flow and project timeline for each of the key functional areas of a wireless venture, such as marketing, sales and distribution, customer care, systems and processes, and organisation.

Constant monitoring
Finally, the execution phase (which DiamondCluster says will usually take six to nine months) must be overseen by a dedicated team whose job is to monitor the entire launch. A steering committee will also be useful to accelerate decisions, escalate issues that are raised along the way, and reinforce ownership of activities.

The full white paper can be obtained by sending an e-mail to mvno@diamondcluster.com.

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