The MVNE / MVNO opportunity in Asia: stand out or fade away?
The MVNO market in South-East Asia is primed for growth, with new entrants set to provide consumers with greater freedom of choice. Shashank Singh investigates the imminent arrival of MVNOs in Thailand and looks at the challenges they must overcome to be successful.
Put simply, an MVNO is a mobile service provider that doesn't own or operate its own mobile network infrastructure. Instead, it leases network capacity from established Mobile Network Operators (MNOs) to offer its own unique service plans and pricing, targeting specific niches or offering more competitive rates. Here in Asia, some countries have well established MVNO ecosystems, such as Singapore and Malaysia, whereas others are only now starting to open up to the MVNO opportunity.
For consumers, the key benefits of MVNOs are freedom of choice and more competitive pricing.
Whilst market saturation, eroding profit margins and regulatory policies are pushing the overall telco market towards consolidation – as we have seen through the recent mergers of Celcom and Digi in Malaysia, and Indosat Ooredoo with Hutchison 3 in Indonesia – consumers are being left with fewer options when it comes to choosing their service provider. MVNOs break this power dynamic, offering alternative plans and empowering consumers to switch if unhappy.
Pricing is another area where MVNOs shine, however this doesn’t always mean cheaper services. Today's customers are looking for personalised and customisable plans that meet their individual needs. While MNOs can be innovative, their focus on maintaining vast networks often hinders their ability to truly understand consumer segments and preferences.
Countries with only one or two prominent service providers threaten to make communication a luxury, not a right, as telcos have the power to price services at will (albeit with regulatory oversight). In a global market where connectivity is increasingly vital, MVNOs offer an alternative, injecting competition and driving prices down, ensuring everyone has access to affordable mobile services.
We’re seeing this story played out in Thailand, a country that boasts a population of around 72 million people and with mobile penetration a staggering 141% of the total population, as of January 2023. However, consumers, associations and politicians have been increasingly disappointed with the pricing, quality of service and lack of choice in the market, which turned into a duopoly when True, the mobile operator of the local conglomerate, merged with Telenor’s Thai unit, DTAC, last year.
In response, the Thai regulator has recently announced the creation of at least seven regional MVNOs in the market to increase options and services for the people.
The following quote from Dr. Saran Boonbaichaiphruek, Chair of Thailand’s NBTC (National Broadcasting and Telecommunication Commission), sums it up:
While the intent is commendable, it is not a new one in the region or globally, and it would be an oversimplification to portray the MVNO introduction in Thailand as a definitive solution.
Paradoxically, the strengths of MVNOs also become their vulnerabilities. MNOs can still boast of their coverage and access, and most importantly control the wholesale prices for the connectivity they provide to the MVNOs. They are also most likely to get access to the latest spectrum and gain a first-mover advantage. On the flipside, MVNOs counter this with differentiated / superior customer service, more competitive pricing and tailored solutions for specific customer segments.
Challenges for MVNOs
Customer experience
The quality of customer experience is one of the biggest differentiators for an MVNO. Is your customer service slow, unresponsive or unhelpful? Are you constantly getting low NPS scores? If so, your business is at risk. MVNOs must be more agile and customer-savvy than the incumbent MNOs. Key to this is a true 360-degree view of the customer and real-time analytics, which should be used not just to pre-empt customer issues and proactively fix them, but also to enhance customer stickiness and delight through loyalty programmes and personalisation features.
Service and pricing innovation
Do you only offer basic voice, SMS and data services? The foremost reason for dwindling service provider revenues around the world is the inability to provide more than simple connectivity. While it was a lucrative business until about a decade ago, the rise of OTT digital services has left many mobile service providers floundering. To improve ARPU and grow overall revenues, MVNOs need to partner with digital service providers such as streaming platforms, gaming companies or even perhaps online storage businesses, to provide real solutions to consumer problems rather than just connectivity products which are now taken for granted.
If you're not offering these services, then you're missing out on a significant opportunity to attract and retain customers. However, this requires a flexible, service-agnostic product catalogue to quickly launch new products and packages, backed up by convergent charging and billing capabilities to readily monetise these new partner relationships.
Operational efficiency
While growing revenue is essential, MVNOs must also keep an eye on their operational expenditure to ensure overall profitability. We have seen several MVNOs over the years falling by the wayside because of inefficiencies in the lead-to-cash cycle: revenue leakage, lack of streamlined operations or just a general shortage of automation across all business functions.
Supply chain
One of the biggest challenges for MVNOs is their lack of scale at the beginning, which makes it hard to negotiate deals with the established MNOs. MVNOs are meant to be experts in the consumer-facing side of things and are usually more focused on differentiating themselves on pricing and service, rather than negotiating complex deals with MNOs.
This is where MVNEs (Mobile Virtual Network Enablers) can help. In fact, the Thai regulator has just announced plans for an easy-to-connect MVNE platform to enable and support the seven regional MVNOs that will be launching. The MVNE will host and negotiate wholesale pricing on behalf of multiple MVNOs and as such, the MVNOs will benefit from economies of scale that could not be achieved on their own.
By leveraging an MVNE’s expertise and the right BSS/OSS platform, MVNOs can accelerate their time-to-market, lower their investment costs and reach financial break-even faster, while still being able to focus on their core competencies and deliver exceptional customer experiences.
Assuming favourable government policies, we are sure many more monopoly / duopoly markets across the Asia Pacific region will adopt this MVNO model soon.
Contact Cerillion now for more information about our MVNO and MVNE solutions, delivered to customers around the world such as MVN-X and Lobster.