Saturday, March 12, 2005

EasyMobile and why MVNO's prosper

MVNO's are refreshing. Comviq in Sweden, EasyMobile and Virgin in the UK, Boost in the US to name but a few. They are not lumbered with baggage. They have the freedom to create clear and compelling propositions that take advantage of many of the mistakes that old-school operators have made. They are not trying to be all things to all people. They know their market, and they tailor their offerings so that it does what their customers need it to do. They are the new market entrants who arrive with a message of disruption, anarchy and championing the customer (Orange did this way back in 1994, and they built a network!).
Easymobile launched this week in the UK with a very simple voice and text proposition, based on a SIM-only offer (no high SAC's), Internet billing, and a single pricing plan which excludes any monthly contract. For a large portion of the mobile population, this encapsulates exactly what they need from a mobile; good network coverage, value for money, and a simple pricing structure. It is easy to understand and leverages the brand values that Easy Group has established in the UK (and Europe) with services such as EasyJet (low-cost, no frills air travel) and Easy4men (low-cost, no fuss male grooming products).
Boost Mobile has been extremely successful in the US and is a testament to the team at Nextel who had the foresight and courage to experiment with customer segment specific brands. The Boost Mobile example is an interesting one because it is owned and operated by Nextel. Its an example of an operator launching its own MVNO to compete with its own existing and established customer base. Other operators have toyed with MVNO's but only from a network re-sell perspective, and that was partly enforced by the regulators. I think many of the old-school operators see MVNO's as meaning margin erosion and brand dilution, but they are missing the point. Surely it is better to lose customers to yourself (albeit under a different brand), than to someone else? And the fear of margin erosion is false. Comviq has consistently reported margin percentages in the 50's and 60's!
The MVNO landscape is going to hot up - EasyMobile has plans to launch in another 11 European countries and the founders of Boost are launching a new MVNO called Amp'd in the US. Surely this calls for a re-evaluation of the old-school operators MVNO strategies?

No comments: