Richard Doughty, Senior Consultant at Cerillion, looks at how the MVNO market has evolved and identifies the challenges and benefits of deploying multi-tenancy BSS platforms to support these services.
With over sixty MVNOs
of varying sizes now operating in the UK alone, the range of alternative service providers has never been greater. Any traveller arriving at a major transport hub or a business person buying the Economist in a corner store is presented with a cornucopia of mobile offerings. Whilst many MVNOs have been launched by recognised brands from other verticals such as retailers and utility companies, recent growth has been focused around specific communities and ethnic groups, with targeted MVNO branding designed to appeal to each group.
Though the number of MVNOs has steadily increased, the bearer networks have of course not changed, with the five host mobile network operators (MNOs) in the UK still being the only games in town. So to support these new brands and channels these MNOs have moved to deliver a selection of connectivity options for the MVNOs, ranging from pure wholesale to fully managed services with many variations in between.
For well-established MNOs it serves their purpose to allow a new entrant to wear the cost of new brand creation, advertising and customer acquisition. With a well-designed Business Support Systems (BSS) infrastructure they can set-up a new wholesale customer within their billing environment and most, if not all, now provide wholesale gateways for automated provisioning.
In an effort to ease the introduction to service for new entrants, many networks are now going one step further and offering the next level of functionality to these resellers & MVNOs as a ‘white-label’ or fully managed service. This approach can require a more advanced BSS platform than the traditional and simplistic wholesale model, with a key component being the ability to support ‘multi-tenancy
True multi-tenancy where an operator can support multiple, distinct vertical channels within one BSS platform requires, ideally, soft separation of data in many aspects of their system. If using distinct environments it becomes more of a multi-instance
deployment. The requirements for logically separated (as opposed to physically separated) systems include, but aren’t limited to; customer segregation, product catalogue filtering, differing business processes and workflow, hierarchical user access, collateral branding, multi-level rating, and both wholesale and retail billing for one environment.
Many of the earlier MVNOs focused exclusively on prepaid customers. This is likely to have been for two reasons: firstly, prepaid was a more natural payment method for the customers they were targeting; and secondly, it offered a simpler business model from an IT/IS perspective. However as the MVNO customer bases have grown, postpaid and hybrid propositions are now being introduced as the priority has changed from one of acquisition, to the need to build loyalty and secure revenues from what can often be very high ARPU customers.
This change in focus is driving the requirements for more sophisticated multi-tenancy BSS that can provide the breadth of functionality to support these more complex propositions.
For MVNOs looking to acquire their own BSS environment there is still a high entry cost, so MNOs who can provide access to a managed BSS that includes flexible billing offer a better growth path for their clients. Several MVNOs have already grown from a completely managed prepaid service to acquiring their own IN prepaid platforms and from there their own BSS, at which point they have become more mature MVNOs, owning everything except the network.
So what are the challenges for MNOs looking to support MVNOs?
Firstly, there’s the question of the MVNO business model, which can range from a white-label MVNO who uses a full managed service, through to a mature MVNO who may only need a wholesale relationship. Can the MNO support all of these variants or should it focus on a more limited MVNO portfolio?
Secondly, there’s the issue of can or should their existing BSS support the MVNO operations? A suitable system must allow the addition of new MVNOs very quickly without customisation. Each MVNO must reside within the one system whilst restricting the access of the MVNO users to its customers only. Similarly, the products, pricing and discounts must also be restricted by channel, and the collateral produced needs to be branded as the MVNO requires. However, twisting and bending a monolithic BSS environment to support these multi-tenancy and multi-channel models might be extremely difficult.
And finally there’s the decision about how the MVNO service is provided? The cloud revolution means that MVNOs may now expect to use the BSS platform on a Software-as-a-Service (SaaS) basis.
And what benefits can MNOs expect to achieve?
In markets with very high service penetration, network usage growth can only be achieved through the introduction of new services and persuading subscribers to churn from other providers. The targeted MVNO branding can be seen as a tool with which to increase subscriber acquisition and this has often been driven by organisations affiliated to these prospective customers, for example supermarkets or notable individuals in ethnic groups. However, typically these are companies or people with expertise in marketing and brand management, but of course no experience of providing communications services.
By preparing their own multi-tenancy BSS platform, it also improves responsiveness and time to market by allowing them to copy wholesale products in to their retail catalogue(s) quickly, ready to make pricing changes whilst preserving all of the provisioning and business rules associated with that product.
It is also not just MVNOs who start new brands to address new markets. MNOs can themselves start their own new brands utilising their multi-tenancy BSS. Doing this within the same platform as their main brand dramatically improves time to market, reuses existing BSS investments and should be a logical choice when considering the three time-honoured project fundamentals of time, money and risk. And having both wholesale and retail functions use and reference the same source of data for rating, billing and reporting ensures that the MNO has a ‘single source of the truth’, and this itself delivers benefits to the MNO in margin analysis and revenue assurance.
The multi-tenancy model will not suit every MVNO as some will insist on completely segregated platforms. However, demand for multi-tenancy BSS platforms is undoubtedly set to increase as MNOs look to expand their offerings and reach new market segments with both consumers and in the burgeoning M2M sector. The MVNO market is set to stay and to grow, and MNOs who can configure their BSS to support the full breadth of business models will be well placed to grow network traffic and open up new revenue streams through resellers and their own targeted brands.