TECHFECTA

Tech Mentor

Uncategorized

How to Start an MVNO

admin

I put some notes together for those of you who are thinking about how MVNOs get started. Maybe I can help.

When planning this, decide what you want, the solution, and your customers. It doesn’t have to be a huge solution. Many just want to solve their problems and it grows from there. 

I put this together because it’s like starting a private 5G network. So many synergies. The thought process is very similar. 

FYI – this was selfish of me because I wanted to learn more about the MVNO business. So, while I am sharing with you, I wanted to learn more myself. 

To be honest, this is more of a list of questions for you to ask yourself. These can only be answered by you and your team. The idea here is to prepare you for this venture.

Good luck!!

What is an MVNO? 

Basically, it means Mobile Virtual Network Operator. What is that?

That is a company that doesn’t have to build any infrastructure, just a billing system and possibly a core. Then they offload everything to a partner that has a RAN already built. 

RAN is Radio Access Network, the radios on towers, buildings, and poles across the country. 

The MNOs, Mobile Network Operators, that I am talking about here are AT&T, T-Mobile, and Verizon. They have a national radio network built that the MVNOs I mentioned above ride on. The only difference between the MNO and the MVNO on the same network is the plan and the SIM.

Let’s look at Mint Mobile since we’ve all seen Ryan Reynolds do the commercials. So, the MVNO’s phone displays “MINT” but it’s actually riding on T-Mobile’s network.

The MNO sells airtime, [could be data or minutes], in bulk to the MVNO. The contract could be a chunk of “use it or lose it minutes” or a reduced rate per minute.  

It could be for smartphones, tablets, IoT devices, or anything that can be controlled on a carrier-grade wireless network. 

Do you want to start an MVNO?

Why? It’s the question you should have answered already.

Today, some MVNOs started because they wanted a private network and then realized they could do more or make money. 

Some think they can offer the same service for less money. After all, they don’t have all the overhead that an MNO has. 

There are all kinds of MVNOs, not just the popular voice and data like Boost, Mint, TracFone, and Visible. (Full disclosure, I have Visible and think they work very well, although T-Mobile looks pretty tempting.) There are IOT MVNOs and special purpose MVNOs, like Kajeet, Aeris, and Wireless Logic. To see a full list of US MVNOs, go here. 

How committed to this will you be? This is really about starting a new business and serving customers. Don’t overcomplicate it. 

Why do you want to start your own MVNO?

You have to ask yourself why. What’s the goal? To get rich? To serve a niche? To solve a problem? Why are you doing this?

Maybe it’s because you built something for your own purpose and now you want to expand your coverage and add customers while you’re at it.  

What is your purpose for doing this? Do you have a niche you want to serve? Do you have a small network and do you want to serve their specific customers? Maybe it makes sense to ride a carrier’s network for the solution.

Sometimes you just need more coverage.

What’s your business plan? How will you make money?

What communications problem are you solving?

What is that problem? It could be as simple as offering a cheaper and consistent phone bill to your customers. Maybe it’s more.

Is it to give unlimited data to elementary schools?

Is it to connect IoT devices across a state?

Is it to read water meters in remote areas?

Is it to connect drones across a city?

Is it to offer broadband services to the elderly? 

Whatever you choose, create the model you want by identifying the demographic you want to hit. 

What is the goal? It doesn’t have to be for everyone, but what if it is like Mint Mobile and Visible? Or is this strictly an IOT play targeted at schools like Kajeet’s Model?

How will you make money?

Here is where you set your business model. Model whom to sell to and then how you will make money. Look at the expenses realistically and understand what your operating expenses, (OpEx), will be going forward. Then you have a high-level model to work with.

What mobile service will you Provide?

This should have been part of your business model, but I am mentioning it to clarify your thinking. 

I broke it out separately because once you define the problem you will solve, then you need to look at how it can be solved. That could be voice, broadband, or narrowband. What service solves the problem?

Are you going to provide full service, data, and voice?

Will you provide data only?

Will it be big data or low data?

What plans will you offer?

How will you define the plans?

What will you charge for the plans?

What devices will be on your network?

How will you make money?

Outline the model of the problem. It may not be the demographic that you expected. It may also not solve the original problem as you intended. 

What is your differentiator? Your communications niche?

OK, the problem-solving will define your niche but I want you to think about who you’re serving. 

Did you want to serve just schools, utilities, teenagers, older people, or what?

Did you want to just have low-data devices on your network or video cameras?

Do you want to support utilities?

Did you want to have smartphones or laptops?

What about delivery service scanners, maybe that’s the niche. 

What makes you different? Did you think this through? How are you going to stand out to your target demographic?

You may want to appeal to utilities by offering meter reading capabilities, very niche.

You may want to appeal to a young demographic with unlimited data and gaming offers.

Maybe older people that only want voice. 

Maybe it will be to control and track drones. 

It may not be as competitive as you had hoped. Research and ask potential customers if it’s something they would pay for. Maybe you already see someone doing something like this, how do you think Visible got started? If you see others doing it with success, look at them and what makes them successful. Mint Mobile had Ryan Reynolds and their silver bullet. What is your silver bullet?

Just work out these details and make a decision.

Know your budgets, expenses, incomes, and the ramp-up.

Can you afford this?

How much money do you have to do this? Do you need backers or can you ramp up yourself?

What do you think it will take to ramp up? Do you have enough funds to get up and going?

Make sure you understand your budget. Not just upfront CapEx expenses for hardware and costs, but the ongoing OpEx.

What income per user do you think you will get?

What is the expense you have to lay out for billing, customer management, customer service, network gear to interface to a carrier, for the core, for the email, and so on?

What will your OpEx be for salaries, advertising, selling, referrals, maintenance, customer service, internet access, licensing, websites, remote tech support, and other things you will learn about?

How much do you need to get going and operate for 3 months without any customers? Yes, think about the worst-case scenario.

How long will it take you to ramp up and get paying customers online?

What about inventory? Will you carry your own devices or have the customer buy their own? If you have inventory, where will you store it and how will you ship it? This all takes money.

How will you make money?

Here you need to answer these questions. Make a plan for how much money you will need. 

Then think about how you will make money. It would be nice to know how you will make money and when you think you will be profitable. Don’t forget the expenses. They will begin to add up if you’re losing money. 

What is your launch plan?

Will you offer prepaid or monthly?

What about device sales, can you handle it?

What about the SIMs, they need to be managed somehow. Today eSIMs should change the way this is done. Hopefully, it will make signing up new customers easy and automated. Unfortunately, eSIMs may not be common in IoT devices for quite some time so you may have to figure out how to handle it separately.

What packages will you offer customers? Will you offer small, medium, or large options?

Customer support is crucial. You need a way to sign people up as simple as possible. Mint and Visible automated as much as they possibly could. I assume most of it is offshored to save costs.

Look at Xfinity who uses Wi-Fi to offload as much data as they can. That cuts costs considerably. They have a Wi-Fi network in their home markets to support this. 

What will your competitive edge be? 

Xfinity also has a solid marketing strategy. They’re reaching out to the millions of existing customers they already have with low rates, lower than most MNOs anyway. They did the marketing right by constantly pounding their customer base with their plans and details. Trust me, I live in an Xfinity market. They’re everywhere.

Billing, customer setup, and customer service

How will you bill? You need to know how you will bill and set up accounts. Sure, we all expect to automate payments using credit cards or having a prepaid model, but that may not be enough detail.

Most MVNOs have a simple and repeatable solution that is the same across the board. Prepaid or monthly payments. It’s that simple. This may seem too simple or you’re afraid of losing revenue from heavy users, but what about the light users, will you charge them less?

Some companies want to charge per byte or ping or minute, this can be a billing nightmare and I’ll tell you now, many customers hate that. They can’t budget anything. If they are light users, they think you should not charge a monthly fee. If they are heavy users, they may want you to track and document everything. All this adds cost.

Visible got it right with a simple unlimited plan. Simple and consistent. I know Visible doesn’t get much love in the MVNO world, but their plan is simple. Verizon made it easy and automated and cheaper than most MVNOs. They worked in alliances with corporations to save the end user even more. I bring them up because I think that was their plan, to make it so simple and unlimited it would be hard to say no.

How will you set up initial customers? Most MVNOs have the customer do all the heavy lifting by getting a website up or having an app where the customer can do it themselves. Enter your info and a credit card, and you have a new customer!!

However, if things go wrong, you will need customer service of some kind. They may not have to talk to the customer directly, they could communicate by email or by an online text app. 

I signed up with Visible and they did it all through the website, app, and with a virtual assistant. No calls or human interaction beyond the online assistant. 

How will you make money?

Define your MNO plan. Which MNO will you choose?

What is an MNO? It is the carrier, the Mobile Network Operator. Here in the States, it could be AT&T, DISH, T-Mobile, or Verizon. It could be a smaller carrier or a niche carrier if that’s your thing. Or perhaps a regional carrier like US Cellular or Viaero. 

Consider your plan with the MNO. Which MNO will serve you and your customers best?

Maybe you want multiple MNOs supporting you. That could be the answer if you need specific coverage areas where one may be stronger than another. 

Maybe it’s all about costs. One MNO may be cheaper than another.

It could be that one MNO will support you better than another. 

Once you decide what the key factors will be, you can start looking at the MNOs and deciding who would work best for your model. 

What will the terms of your contract be? If you want to see some sample agreements, the DISH/AT&T model is here, but don’t go by that because it’s 2 large companies, not a small start-up. A generic contract model is found here. 

Another good resource is here.

How will you connect to your MNO? 

This should be planned out.

First, I assume you have fiber to the internet and the plan would be to connect that way. 

I would assume that your core will have all the billing and use information while the MNOs network will handle all the rest.

So, the MNO should have a procedure for you to follow. 

Is your pipe to them large enough to handle short-term growth?

How will you grow?

How long will it take you to expand the pipe, add a new connection, or get new equipment for expansion?

These are all considerations that you have to be prepared for.

What about your MVNO core?

OK, the core may be an issue, they are so expensive. So, let’s look at the pros and cons of using someone else’s or your own.

First, if you have IoT only, it helps out because those cores are generally easier to work with. Voice can be a nightmare for some startups due to the cost. 

If you offer full services, voice & data, then you need to have a solid plan in place. By the way, when I say voice here, I am specifically talking about embedded voice, like VoLTE or VoNR. That is why it is so expensive. VoLTE and VoNR add costs, upfront and per sub in the core as well as the RAN.

Using a third-party Core:

  • They handle the setup,
  • They have upfront cost models you can see and understand,
  • They support maintenance and upgrades,
  • You work out a price and can build a budget,
  • You’re outsourcing all the core costs, upfront & OpEx,
  • You have a partner to work with,
  • They may help you with advice and guidance,
  • They may already have partnerships with MNOs so you don’t have to set that up right away,

Building your own core:

  • Do you have the expertise or will you have to outsource? Trust me when I say that I seriously doubt your existing IT staff can handle a core,
  • If you have to outsource, how well do you trust the new team, vendor, or company? I would bet they’re going to be offshore and the time difference will become an issue.
  • How will you handle maintenance and upgrades?
  • How will you handle growth?
  • Whom will you call when you have problems? Even small problems can cause nightmares.
  • Can you automate everything up front?
  • How will you pay for all of this prior to having any customers?

Just some food for thought.

Will my MVNO be regulated?

I don’t have all the details here, but be ready for the following. You will have to do the research. 

The FCC regulates MVNOs similarly to the MNOs. 

You also have to deal with additional federal and state regulations.

You have to be prepared for data protection compliance. This is a huge deal lately. So make sure you look into applicable COPPA, Children’s Online Privacy Protection Act, and CCPA, California Consumer Privacy Act. 

Chances are you will need help in this area. 

Will you need an MVNE?

What is an MVNE? It is an MVNO Enabler. An MVNE might provide planning, billing, customer service, and provisioning for an MVNO, but an MVNE won’t provide the actual connectivity services or the radio infrastructure, that is the MNO.

Can they help you make money?

Will you need an MVNA?

What is an MVNA? It’s a Mobile Virtual Network Aggregator (MVNA). They buy access to an MNO’s network and then sell it to MVNOs. They don’t go direct, they only sell to MVNOs, like a wholesaler. They may be able to get better deals in an MNO compared to a startup. 

Will their discounted service help you make money?

Read below, you may start with an MVNA since they did all the heavy lifting with the carrier. They have a contract in place and better costs since you assume they have many customers on that carrier. 

How will you advertise in your Niche?

You will have to advertise. You will have to find your target audience. You will need to focus on endless promotions. 

If you want an amazing model, look at Ryan Reynolds and Mint Mobile. He did it right, focusing on YouTube because it was cheap and had a huge reach. He also made it fun. You can’t wait for the next video to come out. That guy was on fire!!!

Can you create a plan or way to advertise to bring customers in? 

Will it be maintainable?

Can it help you grow quickly?

Do you have a solid system to complete the sale in a timely manner? Is your process low resistance to the customer?

This will help you make money!

Will you rely on referrals?

Can you line up referrers? They may help you ramp up quickly for a fraction of the cost. It’s like having a free sales team that works only on commission. 

They may be bloggers or YouTubers or even Instagram people. See what would make sense to your business case.

This is a solid way to expand, but most will not do it for free, although I tend to help too many people for free, most people want paid and deserve it. So figure out how you will pay your referrers. 

Ramping up phase 2.

This isn’t a network issue, but more like a sales and billing question. Do you have a sales team, or a team of referrers that will help you ramp up quickly?

Do you have a customer interface and billing system that is easy to use and quick for the customer to use?

Do you have a device plan for the customer to use their device or can you ship them something quickly?

What about your UE devices?

You may have to provide your own UE devices. If you do make sure you have a way to get them to the customer quickly. Also, make the selection easy for the customer. You don’t need to provide 1,000 different devices when 10 or 20 will do. 

Most online MVNOs make it very clear what devices will work on their network. This isn’t always because another device won’t work, but so they can sign up people quickly, easily, and efficiently. 

Why complicate things? You are there to serve a target audience. Why complicate matters? Keep it Stupid Simple (KISS).

Figuring out how your customers will get your devices up front makes your life so much easier down the road. You may use Amazon or Apple or Samsung. You may have a specific dealer they can order through.

You may even have your own warehouse and inventory, but that adds cost. Cost gets in the way of making money. 

Make a plan to streamline device delivery to the customer. 

Figure out the logistics ahead of time so you know what expenses you will incur for device delivery, especially if you’re shipping them yourself. This adds cost.

Logistics can get complicated and messy, so if you have a partner with experience, it makes your life so much easier. 

Get Ready for Problems

Let’s face it, crap happens. When it happens to you it could cost you money or customers or both. It will suck.

Ask others what they have encountered. If they’re not a competitor they may tell you what they have seen and how to bypass those issues. 

Don’t be afraid to work with a company that works in this niche. Most are very helpful. They will warn you and possibly help you avoid major issues before they happen. 

Problems are inevitable and you can’t account for them all. So be prepared for what you expect then be patient with the problems you didn’t expect. We all get blindsided from time to time. 

Outsourcing

You already outsourced the network to the MNO. You may even outsource the core. It may make sense to work with the MVNA and MVNE for additional services. You could even outsource customer service and support to offshore companies. While no one likes to hear that, it makes financial sense as you grow. You can’t do it all on your own if you plan to get big.

Links to Learn:

Leave a Reply