The news over the past couple of weeks has been dominated by arguments over
competition. As well as the regular arguments from BT’s rivals over the commercial viability of Openreach, there was also the exit of the Post Office from the MVNO market.
The institution became the latest household name to exit the mobile market following Sainsbury’s departure earlier in the year. It raises some serious questions over the viability for MVNOs in the UK. If brands with the history and presence of the Post Office are still forced to leave the market, what hope for those unknown names?
The digital age has skewed the perception of marketing spending beyond all recognition. The emergence of brands such as Uber and Airbnb without significant marketing investment has led to some claiming that new companies can compete using online media.
At the same time there has been a major investment from older online brands such as Google and PayPal in traditional channels such as billboards and television advertising. It means that the ad planning from agencies incorporates a blend of different mediums, while those with smaller budgets often attempt online-only strategies.
In this environment it is incredibly difficult to find a clear way to establish a new MVNO brand and compete with the existing players. It is a market where brand is absolutely critical to its success and where an established presence is often a great help.
You only have to look at Tesco and Virgin to see how other businesses can successfully move into the MVNO market. The difference is that those brands came to the fore during an era when marketing an MVNO was more straightforward.
The other difficulty facing every operator in the mobile market is that there are fewer new customers to be won. Most new users must be acquired from a rival, making significant growth for some MVNOs a long and difficult process.