"Castration" of the virtual operator program, how to make realistic choice?

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Although the difference is very far from the original expectation, but from the mobile user permeability, network resource utilization and mobile market situation, it is still the appropriate time to introduce virtual operators in China, can choose Content category, financial category, Internet Class MVNO, and in the content, payment and other aspects of product innovation. The Ministry of Industry at the beginning of a paper "mobile Communications Resale Business Pilot Program" (hereinafter referred to as the "programme") to the telecommunications sector and private capital excited, while the mood is very complex. Virtual operators (MVNO) The domestic dust-laden for a long time, the foreign market has already entered into the mature ideology again into people's eyes. Domestic telecommunications market on MVNO early in the 90, such as "quasi-virtual operators" for operators to sell GSM, CDMA business, 2005 years or so with the expiration of sales agent contract and operator policy changes gradually withdrew from the historical arena; The 2004-2006 British Virgin Mobile tried to enter the domestic market as a MVNO, eventually resulting in a negotiated miscarriage due to policy hurdles.

The pilot programme released earlier this year and the 5.17 further notes on the pilot programme and review materials provide a more detailed definition and description of the mobile resale business, of which the most important two points are defined as "private capital" for the mobile resale business and the applicant's eligibility.

"The programme" requires mobile communications resale enterprises do not build a core network, meaning that the domestic mobile resale business application enterprises can only serve as brand reseller or service provider services, and can not become a true full MVNO (on the status of MVNO at home and abroad, the programme "Private capital is not less than 50% of the proportion of the company's capital, and the single largest shareholder is private capital company (excluding foreign investors and Taiwan and Macao companies)." Domestic private enterprises listed abroad, the proportion of their foreign equity should be less than 10% and the single largest shareholder as the Chinese investors) ", which means Tencent, Ali, Sina, Baidu and other foreign capital accounted for a larger than the national Internet companies to apply."

In view of the late start of the domestic market, many restrictive conditions, the complexity of policy regulation and operator cooperation, and the reasons of high risk of Operation MVNO, low ARPU and long investment return period, the view of domestic MVNO development is constantly emerging. @ Ferry on Qingyun think, MVNO for the domestic market to the opportunity is still very important, not to be missed, operators of the current network and market operation status for the MVNO provides an objective condition, MNO (Titanium Media Note: Mobile operators) through to MVNO wholesale business depth Fine tillage market segments, is far more effective than struggling with innovation in mobile internet.

Why is it the right time for the domestic market to introduce MVNO?

Global mobile operators ' perceptions of MVNO are shifted from competitors to strategic collaborators. The development of global MVNO has gone through three stages: 1998-2003 is the initial stage of mobile virtual operation, MVNO began to enter the developed markets of Europe and North America, 2004-2007 is the peak of development, the annual new MVNO peak is up to 80; 2008 began, Western Europe, Markets such as North America are maturing and stable, with emerging markets such as the Middle East, North Africa, South America and Asia showing rapid growth.

At the same time MnO and MVNO of the cooperative relationship has also undergone a subtle change, initially mno regard MVNO as competitors and policy control and MVNO resistance, gradually began to accept the existence of MVNO, the last operator found that through the introduction of MVNO although the ARPU slightly reduced, But it can reduce the cost of their own customers and significantly increase the rate of EBITDA, operators began to actively seek new MVNO partners to carry out a positive wholesale business strategy.

The most typical case of success through strengthening strategic cooperation with MVNO is that the German operator, e-plus,2002-2005, was affected by O2, T and Vodafone's competition, E-plus user growth was significantly lower than the German industry, with a EBITDA rate of 32% Dropped to 24%. Then E-plus began to adjust the strategy, build more sub brands, and gradually introduced 34 MVNO as a strategic partner. In 2005-2008, the E-plus user growth rate increased to 18%, and the MNO,EBIDTA rate, which became the only share of the German telecom market, was raised from 24% to 39%, and the cost of customer acquisition fell by 64%.

At present, the penetration rate of domestic mobile users is the suitable market environment for introducing MVNO. By the end of March 2013, the number of domestic mobile phone users reached 1.15 billion, the penetration rate reached 84.9%, of which the north, upper, Canton, Zhejiang and other developed areas of permeability far more than 100%, the rest of the provincial permeability is more than 60%. Although Western Europe, Hong Kong, Singapore and other developed countries/regions very early introduction of MVNO, but the first introduction of MVNO when the penetration rate of the mobile users are also at a higher level (see figure below)

When the market penetration rate is too low, the MNO will regard MVNO as the competitor while the market penetration rate is too high, MVNO it is difficult to obtain the space of survival and development when the MVNO is introduced. Spain management consulting firm Valoris in Europe, North Africa, the Middle East, Asia, Latin America MVNO field of Practice, 80%-85% of Mobile user penetration rate is the best time to introduce MVNO market. The discussion of MVNO in China at the end of 90 and 20th century was a bit premature for the market environment.

The operating status of domestic operators provides a strategic cooperation space for MVNO. Operators are willing to cooperate with MVNO two points: on the one hand, operators have some idle wireless network resources, can improve the utilization of network resources through MVNO; On the other hand, operators are too busy or unable to provide more satisfying service to consumers in some market segments. On the network level, the Chinese market has been operating since 2009 3G network, according to the report issued by the Chinese mobile TD network at the end of 2012 only 24%, while China Unicom and the Chinese telecom 3G network utilization only reached 30%, distance 80% of the base station maximum load rate has a big gap, There is also a big gap between the average utilization of wireless networks in the world and the increase in the utilization of wireless networks in domestic carriers.

Market level, the domestic mobile market after several telecommunications industry restructuring formed a single large mobile, telecommunications and Unicom north and south polar uneven market pattern, telecommunications northern part of the province and China Unicom southern part of the mobile market share of less than 15%, channels and other market resources are scarce, long-term failure to achieve breakthroughs. In addition, the three major operators are still serving the mass market, no time to take into account a number of specific market segments, such as ethnic minorities, foreign residents, Machine-to-machine and other segments of the market, some operators in individual market segments have also made efforts and attempts, but still can not make a breakthrough. such as the campus market to move a single show, every September Big campus mobile marketing stalls before always a long line, and Unicom, Telecom booth is empty, in recent years, although targeted to launch Wophi, days Wing Fei Young and other targeted brands and products can not shake the status of Mobile.

In addition, the decision-making mechanism of the three domestic operators is more complex, usually a program needs layers of demonstration reporting, wait until the plan is finalized and decision issued, has already lost the best market opportunity, the market response speed is far from adapt to the rapid changes in the market environment. and operators through MVNO can do in some segments of the market quickly corresponding user needs and iterative trial and error, more close to the user services.

MVNO is attractive enough for private capital that wants to participate in MVNO. From the income point of view, the current domestic mobile communications market has nearly 800 billion of the market size, and at more than 10% annual growth rate. According to the global MVNO average of 3% of the market share, will also bring domestic MVNO tens of billions of income source, in terms of profit, according to global experience branded reseller and service Provider type MVNO can achieve 10%-20% of the EBITDA rate, And 2012 Suning and Gome profit margin is only 3.3%, 1.4%, so no matter from the income or profit MVNO all to private capital participation MVNO has enough attraction.

Who is more suitable to carry out MVNO business in China?

From the experience of foreign MVNO, there is a long-term cooperation with operators, higher brand awareness, differentiation, focus on service content, a certain base of customer base, relatively low price, and convenient channels is the key to MVNO success. According to type classification MVNO can be divided into brand type, convenience type, bundle type, financial type, content type, Internet type and so on.

Brand type MVNO: In the original business area to establish a strong brand awareness, a larger scale, more stable customer base, such as the British Virgin Mobile. Domestic such enterprises have suning, Gome and so on.

Convenient type MVNO: Has the rich, the convenient channel, can conveniently provide the service for the customer, like UK's Tesco, Germany's Aldi. Domestic enterprises such as DI-letter, music language, audio and other terminal distribution channels.

Bundle type MVNO: mainly engaged in broadband business, with a certain customer base and channels, to provide users with the integration of bundled telecommunications business, such as BT, Belgium telenet. This kind of enterprise has two-level broadband operators such as Dr. Peng.

Financial type MVNO: Banks and other financial types of enterprises, with convenient channel outlets, can provide users with mobile and financial integration services, such as the Netherlands Rabo Bank, the Spanish Bankinter bank. Domestic such enterprises have some non-state-owned banks, Alipay and other payment companies.

Content type MVNO: Entertainment, sports, media companies, can provide differentiated integration services, such as the United States Disney, ESPN, the Japanese Hanshin Tigers. Domestic enterprises such as the persistent big football club.

Internet type MVNO: Internet companies provide mobile Internet integration content of MVNO services, such as Google in Spain launched MVNO business. Domestic enterprises such as the Music network.

The above is mainly a number of national service enterprises, in various regional markets there are some qualified to apply for regional MVNO service enterprises.

Some suggestions on developing MVNO in the domestic market

First of all, MVNO should form a differentiated and focused value orientation with MNO. MVNO to coexist with the MNO of providing the network, we must form a strategic complementary relationship, focus on the customer base of market segments, and not have a larger business conflict with the MNO of providing network in the user market.

For China Mobile, the current customer coverage level is more comprehensive, but limited by the resource control, innovation ability and the degree of operation refinement, there are still some deficiencies.

Due to the relatively insufficient control of the fixed network resources in the integration of bundled business relative to telecommunications, China Unicom is weaker, through with bundled type MVNO (such as Dr. Peng, such as two-level broadband operators) to cooperate in the country or some provinces and regions to carry out the integration of bundled business; mobile innovation Business by OTT You can strengthen product innovation by strengthening cooperation with content type or Internet type MVNO (such as movie company, football club, video website, etc.) in some valuable market segments, try to introduce MVNO to carry out more refined services, such as the Chinese market for foreigners, machine-to-machine market segments, etc.

For Unicom and Telecom, the pilot period can focus on the relatively weak South China Unicom and the northern telecom, through strengthening and brand-type, channel-type MVNO cooperation, further expand the market of vulnerable marketing resources, expand the user scale, improve network resource utilization, reduce user access costs; In addition, Unicom and Telecom can also try to strengthen cooperation with content-or Internet-type MVNO in the highly developed regional markets.

Second, MVNO must insist on low cost operation. According to the global development experience, the Brand reseller type MVNO's EBITDA rate is generally between 10%-15%, while the service provider type MVNO's EBITDA rate is generally between 15%-20%, compared to the general operator's 35%-45% There is a big gap.

In addition, the size of the MVNO users is difficult to reach the MNO level, the success of MVNO in the single market share only between 3%-7%, MNO economies of scale are MVNO can not imitate.

So on the one hand MVNO must carefully examine the production operation value chain of each element, select the best strategy to provide services to the user at the lowest cost, and the elements that cannot be provided at reasonable cost must be reduced to a minimum by outsourcing, seeking third-party cooperation, or purchasing from a cooperative operator. On the other hand, we should strive for a wholesale pricing model which is advantageous to both parties.

In general MVNO wholesale pricing model can be divided into "retail base on the reduction", "cost based on" and "wholesale pricing" three models, and MNO have a high degree of strategic complementarity, the need for strong support MVNO can be introduced in the initial consideration of the "retail base reduction" pricing model, The guarantee MVNO price relative MNO has certain superiority, may obtain the long-term development, other MVNO generally should adopt "the cost adds" or "the wholesale price" pattern.

Again, effective sales channels are the key to success. If the lack of effective sales channels, even if the MVNO have a loyal user base, then rich content is difficult to achieve success. MVNO must let their products, services and advertising through the entity, network and other channels to effectively pass to the user. ESPN, with its rich sports content, can be integrated into mobile services at low prices to provide to loyal sports enthusiasts, but the lack of offline channels ultimately failed.

This is also the market is not optimistic about content types and Internet type MVNO one of the important reasons. For the domestic market, brand, convenience, financial types of MVNO are rich channels, but other types of MVNO online channel is particularly inadequate, if such enterprises to carry out resale business must be with third-party channels to establish cooperative relations, or from the cooperative operators in the wholesale channel resources.

Finally, the two sides should establish a workable mode of cooperation. Both MNO and MVNO should transmit, access, billing, sales, channels, customer service and other production links to reach a consensus on the scope of cooperation, clearly including control points, decision-making mechanisms, change management and contingency plans and other cooperation processes, at the same time on the system docking, data monitoring, exchange, and disclosure, training, etc. to reach a service level agreement.

Some ideas about domestic MVNO

Part is the model of retailer cooperation.

This part, bullish Unicom and suning cooperation. Suning has a good brand, a wealth of product types, a huge customer base, rich and convenient channels, mature customer service system and long-term good relations of cooperation, these are important strategic resources operators value. In particular, Suning's channel resources for operators have a huge appeal, 2012 suning in the domestic market has 1664 stores, and more than 66% of the store opened in the deputy provincial-level city and county, about 3/4 stores are open in the South market.

2012 Sales of communications products second only to color TV, digital and IT products ranked third in two categories, accounting for the total income ratio of 17.1%, while the gross profit margin of all 8 categories ranked the bottom 2nd. China Unicom has a high-quality 3G network, WCDMA terminal products are also the most abundant and perfect.

@ Ferry on Qingyun, China Unicom + suning cooperation model is the domestic model, MVNO relatively the most strategic complementary mode of cooperation, Unicom with Suning rich to improve its market in the south of the relatively scarce strategic channel resources, the scale of development of users; Su Ning uses Unicom network to carry out MVNO, expand the business type, Pull up the sales of communications products, and through their own brand mobile phone number integration Membership system, to open up mobile communications services and home appliances products and even suning easy to buy online products, and even through large data analysis in-depth insight into the user's consumption needs and behavior, improve customer loyalty.

In addition to the two-tier broadband operators, mobile is difficult to find the right MVNO partners.

Second-tier broadband operators have a strong strategic complementarity needs, mobile can also be extended through the two-tier broadband operators nationwide integration of bundled business, increasing customer stickiness. As mobile in the domestic market occupies a strong leading position, customer coverage and channel resources are very rich and perfect, in addition to this difficult to have MVNO with China Mobile to form a strategic complement. Quality brand or channel class MVNO has already been a mobile distributor, turned to become MVNO for China Mobile also no greater benefits, but it may divert its own huge user base.

It is a good choice to choose the content, finance, Internet type MVNO and to carry on the product innovation in the content, the payment and so on. From the mobile itself, 2G Network load pressure is large, the possibility of MVNO, TD Network although there are idle, but 4 years China Mobile has invested a lot of manpower and resources, a bit like the fools who can not afford, those for the industry understanding of the limited, Financial and material resources are not so strong MVNO want to make a difference in mobile TD network is even more difficult. Compared to telecommunications and unicom, it is difficult to move with MVNO from each other to find a fit point.

Financial type MVNO can innovate the sales model of contract machine. Lump sum "prepaid charge + purchase fee" is the main mode of the current operator contract machine sales, with the increase of the monthly consumption amount reduced to 0 yuan purchase machine. But the reluctance of users to pay large sums at a time is an important factor in influencing the user's participation in the contract plan. If the bank or Alipay become MVNO, in the form of a credit account to enable users to truly realize the 0 yuan purchase, and then monthly payment in accordance with the contract, will be the development of contract users to play a significant role in promoting.

Operators can deploy to increase the number of pilot enterprises through the MVNE solution platform. This pilot only stipulated the first batch of cooperative enterprise's lower limit, does not stipulate the limit. From the current market response situation, the number of applications enterprises is far greater than 6, but it is estimated that the pilot period operators can not directly face too many MVNO.

In addition, as the pilot period is still in the stage of market development, MVNO users are very difficult to develop quickly, the application of enterprise initial investment resources will face enormous cost pressure. By deploying the Mvne platform, operators can provide multiple access, highly customizable portals, external interfaces, and End-to-end solutions for several MVNO, enabling MVNO to quickly deploy business and achieve economies of scale for the market, such as domestic manufacturers ZTE in more than 70 countries deployed Zsmart platform for multiple MVNO access solutions.