A Simple Case of The Importance of Risk Management for The Future of Cellular Industry
A Simple Case of The Importance ofRisk Management for The Future of Cellular Industry Dev Yusmananda, Ssi, MBA firstname.lastname@example.org email@example.com
Cellular Business Value ChainTRADITIONALONE OF POSSIBLE FUTURE MODEL
TRADITIONAL MODEL TRADITIONAL“Today, the industry still look at the cellular business in moresimple format, no differentiation between network provider andservice provider”
Cellular Business Value ChainONE OF POSSIBLE FUTURE MODEL“The value chain of the business is segmented into twomain big sub flows, the Network Provider segment and theService Provider segment “
The Challenge of Cellular Industry• Existing traditional market, the mass market, is getting saturated• The Mass market focus in low margin and high volume• There is no loyalty in mass market• Mass market destroy the passion of being innovative with new available technology
One of the strategy to face the challenge - MVNO• MVNO stands for Mobile Virtual Network Operator• MVNO means a cellular company without having the network infrastructure (or based on the above value chain diagram, MVNO is a service provider only).• The service provider buy the capacity (like the voice minutes, number of sms) or technology (like GPRS service, EDGE service or EvDO service) from the network provider and build and sell the services to end customer, based on the “material” bought from network provider.
What is the benefit of MVNO• the existing cellular company can have many strategic business unit (the service provider/MVNO) without the hassle to have it inside the company• The cellular company can minimize the idle capacity without sacrificing the revenue.• The innovation of the new cellular technology can be facilitated easier
What is the challenge of MVNO from the Risk Management Point of View• TRADITIONAL - When the network provider function and the service provider function stay under one roof, under same company, the need for effective methods tend not properly maintained• TRADITIONAL - There is no pressure to be detail in managing the risk• MVNO - develop a proper risk management plan• MVNO - risk management plan for each operation segment of the network operation• MVNO - develop the integrity of each segment’s risk management plan
The illustrationthe network infra structure rely heavily on the BTSs (base transceiver Station) for making the customers can get the signal.After the customer get the signal, the network provider rely heavily on the network backbone (either it is fiber optic or radio microwave), to ensure the communication can be transport to the MSC (mobile switching).Once the communication reach the MSC, the network provider depends on the MSC to pass the communication to other customers as expected by the one who make the call.At the end of the call to ensure the customer still happy, the network providers have to ensure the billing is run properly
Risk Reduction• Another step the network provider needed to implement are the plan for reducing the risk• Service provider (The MVNO) will not satisfied with only the availability of integrated risk management plan, but they expect low level of risk from the Network Provider• The network provider has to implement risk reduction plan• All the risk reduction plan have to be integrated
Conclusion• The traditional, if we may say, way of doing the cellular business can tolerate inadequate risk management and can tolerate inadequate high level of risk due to the traditionally close relationship under one roof of the network provider part and the service provider part• But the MVNO concept can not tolerate that.• In MVNO concept, service provider is different company to the network provider. Network provider needs to meet certain risk handling requirement before the service provider can or willing to buy the network capacity from the network provider.• The risk management handling in network provider becoming the strategic competitive tool in surviving in the business.