Mvno - Introducting A Post Paid Contract Offer - Pot Of Gold Or Black Hole?
One of the fundamental decisions a Mobile Virtual Network Operator (MVNO) needs to make when constructing a go-to market proposition is which contract style to adopt: pre-paid or post paid. Often an organisation will retain MVNO consultants to opine on this decision and the associated proposition.
A post-paid contract style has the advantage of typically attracting high quality, higher Average Revenue Per User (ARPU) users, this style of contract allows premium revenue generation opportunities, flexible billing and of course a direct relationship with the customer. However post-paid customers expect to be provided with top of the range (expensive) handsets and bundles of inclusive free minutes.
An MVNO offering pre-paid style contracts has, by default, no direct relationship with its customers. Traditionally this style of contract has attracted lower spending customers, who as a group exhibit much lower levels of loyalty. However, pre-paid propositions typically attract a much lower handset subsidy. Indeed, sometimes, if the proposition is strong enough, there is no requirement for handset subsidy at all.
The typical dilemma faced by a client of an MVNO consultant is, “how do I obtain those high value customers typical of a post-paid style of contract but only incur the customer acquisition costs (SAC subscriber acquisition costs) associated with those typical of pre-paid customers?” Of course there is no easy answer to this question, although some of the more experienced MVNO consultants have created proprietary processes and frameworks to guide their clients safely through these, often, uncharted waters.
Andrew White is a founding member of Piran Partners LLP http://www.piranpartners.com/ a leading provider of professional services to the european mobile telecommunications industry, based in London, England. Piran Partners assists both third parties gain MVNO agreements and also wholesale teams within mobile network operators to better support MVNOs.
Andrew has negotiated over 10 MVNO agreements across Europe in his five years on the front line of the MVNO business. Andrew’s end-user market expertise spans large multinational corporations through to consumer. Andrew has over 20 years experience in the telecoms industry.
Andrew has held senior executive positions with: Motorola, Inktomi, RACAL (Vodafone) and DotDash.
Tags: mvno, mvno consultant, mvno finance, mvno proposition, proposition, telecoms strategy, wholesale airtime