S Curve

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How to become a successful MVNO ?

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  • How Alcatel Lucent can help an MVNO to launch successfully its activity ? How trigger the “curve of success” (the so-called “S’ curve) ?
  • S Curve

    1. 1. “ Triggering the S -curve with M-Plug” How become a successful MVNO ? MVNE business venture
    2. 2. Agenda- The 3 « S » of the S-curve S urvey S uccess factor S uccess story
    3. 3. Survey-Telecom, a new era ? <ul><li>Change of paradigm </li></ul><ul><li>« Telco 2.0 » </li></ul><ul><li>New opportunities </li></ul><ul><li>New behaviors </li></ul>Multimedia Fixed and Mobile Market size NICHE RENT NEWCOMERS Telephony Fixed or Mobile MATURITY 2007 INCUMBENT OWN 2008 We are HERE Time
    4. 4. Survey-Trends in the mobile industry <ul><li>Mobile markets are saturated </li></ul><ul><li>Acquisition costs for new subs are too high: </li></ul><ul><li>MVNO enables MNO to wholesale networks </li></ul><ul><li>to have access to new customer databases </li></ul><ul><li>Delivery of mobile services requires </li></ul><ul><li>a complex technology infrastructure </li></ul>&quot; &quot;When you compare the growth of establishments to the growth of managed network connections, the increasing need for managed services is unmistakable.“ -- Robert Rosenberg, President Insight ARPU Acquisition costs Offer MVNO <ul><li>Mobile Virtual Network Operator: </li></ul><ul><ul><li>Company that does not own a licensed frequency spectrum, but resells wireless services under their own brand </li></ul></ul>MNO <ul><li>Mobile Network Operator: </li></ul><ul><ul><li>(Historic) Mobile phone operator (owning a licensed frequency spectrum) </li></ul></ul>MVNE <ul><li>Mobile Virtual Network Enabler: </li></ul><ul><ul><li>Enabler of MVNOs or/and MNOs </li></ul></ul>
    5. 5. Survey- MVNO Revenues, worldwide Source: IN-Stat TODAY 300 MVNOs WORLDWIDE 2009 MVNO = 25% MARKET SHARE
    6. 6. Survey- 25% of mobile subscribers to be owned by MVNOs ! <ul><li>Most active MVNOs: UK + Nordics </li></ul><ul><li>(e.g. Denmark MVNO=25% of subs) </li></ul><ul><li>Netherlands: lots of activity </li></ul><ul><li>Belgium, Germany: MVNOs really present </li></ul><ul><li>Italy, Spain: to start </li></ul>
    7. 7. Survey -MVNO market share in Europe as of mid 2006 (Source: IDATE) Nordics: too deregulated Germany: lots of competition UK: open France: low penetration Italy, Spain, Portugal: to start 15% 30% 22% 15% 3% 1% 1% 0%
    8. 8. The MVNO Business Models Customer Control Multi-country Multi-Operators Indépendency Service Control Services Advanced Voice and Data services 1 host MNO Entry level Own MVNO offer Data services 1 host MNO Offer Brand License Brand Distribution network 1 host MNO Brand <ul><li>MVNO </li></ul><ul><li>Light </li></ul><ul><li>Branding </li></ul><ul><li>Distribution & </li></ul><ul><li>Sales </li></ul><ul><li>Service </li></ul><ul><li>& </li></ul><ul><li>Application </li></ul><ul><li>CC </li></ul><ul><li>& </li></ul><ul><li>Billing </li></ul><ul><li>Access </li></ul><ul><li>Network </li></ul><ul><li>Core </li></ul><ul><li>Network </li></ul><ul><li>Real Time </li></ul><ul><li>Services </li></ul><ul><li>MVNO </li></ul><ul><li>Medium </li></ul><ul><li>Access </li></ul><ul><li>Network </li></ul><ul><li>Core </li></ul><ul><li>Network </li></ul><ul><li>Branding </li></ul><ul><li>Distribution & </li></ul><ul><li>Sales </li></ul><ul><li>Service </li></ul><ul><li>& </li></ul><ul><li>Application </li></ul><ul><li>CC </li></ul><ul><li>& </li></ul><ul><li>Billing </li></ul><ul><li>Real Time </li></ul><ul><li>Services </li></ul><ul><li>Full </li></ul><ul><li>MVNO </li></ul><ul><li>Access </li></ul><ul><li>Network </li></ul><ul><li>Branding </li></ul><ul><li>Distribution & </li></ul><ul><li>Sales </li></ul><ul><li>Service </li></ul><ul><li>& </li></ul><ul><li>Application </li></ul><ul><li>CC </li></ul><ul><li>& </li></ul><ul><li>Billing </li></ul><ul><li>Real Time </li></ul><ul><li>Services </li></ul><ul><li>Core </li></ul><ul><li>Network </li></ul><ul><li>Service </li></ul><ul><li>Service </li></ul><ul><li>& Application </li></ul><ul><li>CC </li></ul><ul><li>& </li></ul><ul><li>Billing </li></ul><ul><li>Branding </li></ul><ul><li>Access </li></ul><ul><li>Network </li></ul><ul><li>Core </li></ul><ul><li>Network </li></ul><ul><li>Real Time </li></ul><ul><li>Services </li></ul><ul><li>Distribution & </li></ul><ul><li>Sales </li></ul>
    9. 9. Where does the value stand ? MVNO CONTROL Network Services Premium Services Real time Services Offer & Billing New Value Access Network MVNO Model MEDIUM REVENUE SPLIT SERVICE PROVIDERS Marketing & Distribution SMS, Kiosk, Video, IVR LIGHT FULL MOBILE OPERATOR CONTROL CRM, Billing, Rating IN Basic Voice Basic Data 45% 25% 5% 10% 15% <ul><li>Multi-country (roaming), Corporate Services, etc </li></ul><ul><li>Presence, IMS Applications, </li></ul><ul><li>Advertisment, Convergent Services, etc </li></ul>+ X % + X % M-PLUG
    10. 10. Connecting MVNO to Mobile Operators  BENEFITS FOR MOBILE OPERATORS  INCREASE TRAFFIC WITH LIMITED INVESTMENT REDUCED FIX COSTS to connect new MVNOS Multi-country footprint: EXPAND MNO BUSINESS To New Countries REDUCED RISKS of dealing with non-telecom players  BENEFITS FOR MVNOs  SECURE SERVICE LAUNCH AND CREATE NEW REVENUE STREAMS Fast and EASY CONNECTION to MNO MULTI-COUNTRY footprint (M-Plug already connected to many operators) DIFFERENTIATED SERVICES per MVNO segment Limit upfront FINANCIAL RISKS SHORT TIME- TO- MARKET MVNO MOBILE OPERATORS MVNE (Alcatel-Lucent)
    11. 11. M-Plug Business Models: MVNx actors – Revenues & Profits Revenues Revenues & profits repartition will evolve with the MVNO’s model and market share Gross Margin MVNO GM: 25% / 30% Example: 15€ bill MVNO GM = 3.75€ Gross margin on airtime used Contribution for usage risk (ratios incoming/outgoing, on-net/off-net, peak/off-peak) Interconnect net cost Contribution to cover full network cost (invest, licence, etc.) Network variable / marginal cost Extra margin on airtime not used (call set-up, 1st minute, unused bundle) 30% 5% 20% 30% 10% 5% Reference Retail Price G.M. COSTS
    12. 12. Success factors-Be different ! Customer MNO Technology Business plan
    13. 13. Success factors- MNO challenge (Be attractive) Brand Distribution <ul><li>NNew customers </li></ul><ul><li>LLow acquisition cost </li></ul><ul><li>IIncrease brand </li></ul><ul><li>DDestroy value </li></ul><ul><li>LLower ARPU </li></ul><ul><li>IIncrease churn rate </li></ul>How MNO see MVNO:      
    14. 14. Success factors- Techno challenge (Be simple) Operator1 Operator 2 Operator 3 MNO MVNO Standard Interconnection Personnalized Services Limited Investment Limited Investment Connect a MVNO in 2 months Connect a MNO in 2 months Telecom Expertise IT & Telecom Expertise A Turn Key Solution An IT & Telecom Platform available
    15. 15. Success factors- Customer challenge (Be accurate) <ul><li>Customer ownership </li></ul><ul><li>Customer database </li></ul><ul><li>Efficient CRM </li></ul><ul><li>Customer segmentation </li></ul>C ustomer base C ommunity C ontent
    16. 16. Success factors- Business plan challenge (Be innovative) <ul><li>Differentiate with: </li></ul><ul><ul><li>Simplicity </li></ul></ul><ul><ul><li>Service </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><li>Define real value proposition </li></ul><ul><li>Expected revenues </li></ul><ul><li>Associated costs </li></ul>MNO/MVNE MVNE/MVNO MVNO MVNO Network Services Distribution Marketing
    17. 17. Success story 1-Virgin Mobile Target: Young Simple: Illimited SMS In UK: 5 M subs (MNO: 12 M subs) Brand
    18. 18. Success story 2- Kajeet Target: pre teen to early teen Simple: 5 cents per SMS 10 cents per comm 35 cents/ day for illimited access to portal No contract Phone: Fun Dedicated Community
    19. 19. Success story 3- MTV Networks Target: Teenage (10-29) Rather female Purpose: Constant screen ownership « Poptainment » In Germany: Associated with an MVNO Content
    20. 20. Sum up- Why asking for an MVNE ? <ul><li>CASH-MACHINE: </li></ul><ul><ul><li>To reduce risk </li></ul></ul><ul><ul><li>To shorten the time-to-market </li></ul></ul><ul><ul><li>To improve the Return On Investment </li></ul></ul><ul><li>DIFFERENTIATE: </li></ul><ul><ul><li>To leverage on best practices detected by the MVNE </li></ul></ul><ul><ul><li>To have only one single interface </li></ul></ul><ul><ul><li>Focus on differentiating factors (customer, business plan) </li></ul></ul>
    21. 21. Sum up- Strengths of the MVNO Content Community Customer base Brand Distribution

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