The UK MVNO market was once a world leader but it has become a battlefield of competition and aggressive consolidation plays. Hit by carrier price wars, and regulation both from Ofcom and the EU Commission, the UK wholesale market is creative but crowded and still bears the scars of a struggling ecosystem. The question now is, can the UK market catch up and regain its place as world leader in the MVNO industry?
The iMVNOx Association, an MVNO trade association launched earlier this year, has located its headquarters in the UK in order to learn from the experts here who have shaped the UK industry, and investigate the industry’s successes and failures. The Association believes the UK can still shape the global dynamics in years to come; but no one said it was going to be easy.
Since the beginning, MNOs have been waging war on their wholesale partners, imposing high set up fees, long negotiation times, volume requirements that are not given the proper internal support to succeed, and weak contracts that leave investors reluctant to participate in funding new start-ups and disruptive technologies. Radically leveraging their power in subtle but effective ways, this past year alone MNOs have destabilised the growing MVNO/MVNA layer to keep the virtual players fragile and unstable. The market bears witness to the crippling effect of this 'bend-but-not-break the rules' behaviour from MNOs and the slippery slope of the ever-changing regulatory environment.
Coming and going
MVNO martyrs this year have been many. First and most unexpected is the loss of Viacloud. The second was Vodafone MVNA Cognatel’s major strategic shift towards a carrier controlled MVNE model, with a narrow focus on larger MVNOs/sub-brands going forward (but that is a discussion of its own). Fundementally these losses show a sharp decrease in support from the carriers, leaving only X-Mobility and Transatel to support the heavily saturated market. Help and talent, however, are being contracted by collaborative leaders outside the UK to the likes of iMVNOx members Teleena and I-New. Still in the UK many others, like the unique, charity based MVNOs Donate Mobile and the World Wildlife fund, have been simply left without a supportive home.
What happens now? What are the procedures, the consumer rights, the communication standards? MVNOs cannot afford to lose the consumers’ trust. Niche marketing and the trust and affinity the niche consumer has for a specific brand are fundamental to the success of MVNOs.
It is because of niche mobile markets continuing to multiply in our ever-diversifying world and the launch of the IMVNOx to tackle common global challenges together that there are reasons to be hopeful. Positive examples include the UK Post Office, 'one-stop-shop' loyalty/VAS model, that is coming to market on EE, and Tesco Mobile, with its access to invaluable customer data, and its ability to use that data to offer the right products, service and deals to the right customers at the right times.
Then there are established brands, like TalkTalk Mobile, that have the opportunity to extend their brand/proposition in to prepay to address their segment even more fully than they do already.
Gamma is another example, maintaining differentiation, profits, and loyal customers by carving out a piece of the wholesale market for itself, cornering the SME users, and gaining massive market share.
There is even hope that cost-led ethnic MVNOs are not the only alternative and there still is space for ethnic specialists that add value rather than take it from an already competitive market. All it takes is a lateral examining of the market, and the opportunity to talk to, listen and learn from people who have been there before and who might do something differently in the future.
In order for the UK market to not just survive but thrive we must open a new dialogue with both the carriers and the regulatory commissions, to find a balanced solution. Otherwise we are in danger of history repeating itself with MNOs continuing to provide shallow and selfish support for MVNOs making it almost impossible for true and healthy competition in the UK MVNO market.
Looking to the future
What is needed is a new philosophy from the network carriers, one that aligns MVNOs as an important part of the value chain and one where regulators will work with MVNOs to understand their impact and enforce consequences where necessary. Without that new philosophy the MVNO industry in the UK will continue to be at the mercy of the MNOs.
MNOs and the MVNO sector can work together. MNOs could be a vital piece of the solution yet at present they still refuse to recognise or even come close to taking advantage of the potential benefits of a healthy wholesale market, stubbornly ignoring the reality of a future that is staring them in the face.
History has proven so many times in technology that by resisting the momentum of the masses you are only delaying the inevitable. It’s the classic rise and fall of the information empire.
The iMVNOx Association says ‘forget about history’. This is the grand bargain on the table now - MVNOs cannot be the solution to competition and also under the control of the MNOs.