Entering the Full MVNO space with its complexities involved in building and managing a full-scale virtual network, complying with regulations, negotiating infrastructure agreements, and competing in a dynamic market requires a certain level of expertise and experience. It demands a strategic approach, substantial investment, and a comprehensive understanding of the telecommunications industry and the specific MVNO market.
Reseller Model -> Light MVNO -> Full MVNO
The more customization is seeking a player on the market, the harder it is to achieve it under a Reseller Model (of the MVNO or, more often, of the MNO) in which usually no infrastructure of the MVNO is involved, and often the MVNO is selling under the brand name of the supplier.
The more the MVNO would like to gain independence from the MNO, the closer the model should be to the Full MVNO. The main characteristic of a Full MVNO is that it possesses all core network elements except for the radio network, which the host operator is delivering.
This setup involves significant one-off investment in the infrastructure, more expensive maintenance costs afterward, regulatory approvals, and coordination with existing telecommunications providers. Additionally, considerations for scalability and redundancy are essential for long-term success. At the same time, it allows us to have greater flexibility.
Why would I invest so much money?
A Full MVNO typically has more control and flexibility than a Light MVNO. Some advantages of a Full MVNO include:
- Greater Network Control: Full MVNOs have more control over their core network elements, enabling them to manage services, quality, and features independently.
- Network Performance Management: Full MVNOs can manage and optimize network performance, ensuring a better quality of service for their subscribers.
- Enhanced Customization: Full MVNOs can customize their service offerings, including tariff structures, branding, and value-added services, to better meet the specific needs of their target market.
- Revenue Opportunities: With more control and flexibility, Full MVNOs have the potential to explore additional revenue streams through innovative services, partnerships, and tailored offerings.
- Flexibility in Pricing Models: Full MVNOs can design and implement their pricing models. This can include competitive pricing strategies, customized plans, and the ability to adapt quickly to market or customer demand changes.
- Control Over Customer Experience: Full MVNOs have greater control over the end-to-end customer experience. This includes providing high-quality customer support, managing service quality, and addressing issues promptly, leading to higher customer satisfaction and retention.
- International Expansion: Full MVNOs with a robust network infrastructure can expand internationally. This expansion may involve establishing partnerships with operators in other countries, allowing for a broader customer reach.
Great! Then why do you discourage me from being a Full MVNO?
Full MVNOs encounter specific hurdles, such as:
- Infrastructure Investment: A significant investment in its core network infrastructure involves substantial upfront costs and ongoing maintenance expenses.
- Regulatory Compliance: Compliance with telecommunications regulations is a complex and dynamic challenge. Full MVNOs must navigate legal frameworks, licensing requirements, and other regulatory issues in multiple jurisdictions.
- Spectrum Access: Acquiring spectrum rights can be challenging and expensive. Full MVNOs need access to the radio frequency spectrum to deploy their own RAN, and obtaining a suitable spectrum can be lengthy and competitive.
- Network Interoperability: Ensuring interoperability with other domestic and international networks is crucial. Full MVNOs must establish and maintain agreements with various network operators to enable seamless communication for their subscribers unless they have the assistance of the MVNE.
- Scalability: Achieving and maintaining scalability concerns Full MVNOs, especially if they experience rapid subscriber growth. Ensuring that the network infrastructure can handle increased traffic without compromising quality of service is essential.
- Technology Evolution: The telecommunications industry undergoes continuous technological advancements. Full MVNOs must stay abreast of these changes, ensuring their infrastructure remains compatible with the latest technologies to provide competitive services.
- Customer Acquisition and Retention: Competing in a saturated market requires effective marketing strategies for customer acquisition. Moreover, retaining customers in intense competition is an ongoing challenge, demanding innovative services and excellent customer support.
- Economic Viability: Achieving profitability can be challenging, especially given the initial infrastructure investment and ongoing operational costs. Full MVNOs need to carefully manage their financial resources and find a balance between service quality and pricing.
- Service Differentiation: Full MVNOs must offer unique and compelling services to stand out. This requires innovation regarding service packages, customer experience, and value-added offerings.
- Security and Privacy Concerns: As a telecommunications service provider, Full MVNOs must prioritize the security and privacy of their subscribers. Implementing robust security measures and complying with data protection regulations are critical to their operations.
Full MVNO setup for high-value-added services
Light MVNOs may be more suitable for those looking for a quicker market entry with lower upfront costs, especially if they offer low value-added services and cheaper p. In contrast, the FullFull MVNO setup has more justification within a high-value-added services business, such as cybersecurity and fintech, enabling them to offer advanced features and more customized experiences to their end users. Therefore, the ROI is high. Still, oft, of course, it is essential to assess each case individually.
A Full MVNO setup provides cybersecurity companies with the infrastructure and control needed to offer robust, protected communication services, aligning with their focus on safeguarding digital assets and maintaining high data security.
ARPU is the key
Using an example of a mobile market with the lowest ARPU in the EU of less than 5 EUR, which is Poland (5.42 EUR excluding VAT in 2022, based on statistics provided by a Polish regulator on their website), a Full MVNO model is difficult to justify.
The regulatory environment is another element that must often be considered when deciding if and where to launch a Full MVNO project.
A Full MVNO organization is a giant “machine” not only because of the need to have a whole technical team on board but also due to countless regulations that the MVNO needs to implement in the system, which usually would be provided by the MNO in the Light model. That can be a real distraction from daily operations and sales if not planned well and there are enough resources.
Poland: lessons to learn
These two factors, ARPU and regulations, are being reflected in the number of Full MVNO players having activity in Poland so far (in practice, there was only 1 MVNO that was launched and less than 5 in total that were in the process of implementation and, due to some reasons, has never started their operations, according to my best knowledge).
I find German telecom regulations quite complex, but despite this, Germany has seen higher adoption of Full MVNOs – what is the reason for that? It concerns the highly competitive market conditions and the tech-savvy and well-connected population contributing to a high demand for advanced mobile services.
My advice: Take it slowly and choose the right Partners
Considering a Full MVNO setup requires a clear understanding of your target market, a unique value proposition, and a well-defined business strategy. Factors such as market demand, regulatory environment, and ability to differentiate from existing services should also be carefully assessed. When talking to my Customers, I always explain that a Full MVNO project is complex and recommend taking such a decision in steps. Other big MVNOs proved that in the past by starting with a Light setup, gaining needed experience reaching a certain number of active customers, and switching to a Full MVNO.