Should You Become an MVNO?

This article compares the price of US cell phone plans to those around the world. It shows that the basic packages from the large US providers are in some cases twice as expensive as in other countries.

The small oligopoly of nationwide carriers, being AT&T, Verizon, Sprint and T-Mobile, have no incentive to lower prices. The only thing that will get them to come down in price would be competition or some sort of regulatory action.

The large carriers have created an opportunity for some competition against their products by selling bulk minutes, data and messaging. Companies that buy these bulk minutes are known as MVNOs (Mobile Virtual Network Operators). There are scores of MVNO providers in the country with the largest ones listed here.

The three original MVNOs are TracPhone, Virgin and Boost and who still had over half of the pre-paid cellular phone business in 2012. However, note that Sprint recently bought Virgin and Boost, so perhaps part of their strategy is to create sub-markets and then gobble them up to make more profit.

MVNOs have various marketing strategies:

  • Republic relies on shunting a lot of traffic to WiFi which greatly lowers their costs.
  • Ting lets customers design their own rate plan.
  • Kajeet has plans for kids that are parent-controlled.
  • Solavei uses multi-level marketing similar to Amway.
  • Voyager Mobile competes on price and is selling very low-cost plans.

If your carrier business already has a loyal customer base you should consider becoming an MVNO. Your loyalty will bring you customers, and your existing customers will appreciate being able to save money on cell phones while buying from somebody they trust. As long as you do it smartly there are significant profits to be made in the MVNO business. All that is really needed is having good existing cell phone coverage in your area and the desire to expand your product line.

CCG can help you get into the MVNO business. We can assist you with finding a good deal on bulk minutes, help you design products and prices, help you create a business plan, and help you with technical strategies such as a handphone strategy, and using WiFi to lower costs.

Physics of the Future

I highly recommend anybody interested in Technology to read ‘Physics of the Future: How Science Will Shape Human Destiny and our Daily Lives by the Year 2100’ by Michio Kaku. The book is well written and is an easy and accessible read.

Kaku is a theoretical physicist who researched for this book by talking to leading scientists in many fields of science and asked them where current research is taking their fields by the end of the century. Many scientists see practical and disruptive innovations coming from their own fields of study. But when taken all together, the changes that the scientists see coming look amazingly like Star Trek minus the transporters and the warp speed travel and the Vulcans.

At the turn of the 20th century the world was completely disrupted by inventions like the automobile, electric lights, airplanes, etc. At the end of the last century we saw the world changed drastically by the computer.

Some of the many changes that scientists see coming during this next century include:

  • Cheap fusion power, meaning almost unlimited, pollution-free power for everybody.
  • The ability to locally make things (like the Star Trek replicator) which we are already starting to see with the 3D printer industry.
  • Computer chips so cheap that they are built into everything.
  • A high likelihood of computer sentience.
  • Nanotechnology being used to constantly monitor your health from within and that will intercede to keep you healthy. Cancer won’t be cured so much as it will never be allowed to get started.
  • Space tourism will be routine and not just for the very rich.
  • Driverless cars wiping out gridlock in even the biggest cities.

This book is a fascinating read. The next century is going to see massive technology disruptions that will completely transform almost every industry. In the process many of our largest corporations will go the way of the buggy whip manufacturers.

The book made me think about the telecom industry. One thing that is obvious is that there is going to be massive amounts of data produced everywhere and for this data to be made sense of we will need fiber networks. The idea of gigabit networks will be a quaint idea of the past and we will be having discussions about whether terabit networks are fast enough.

One thing the book doesn’t postulate about is the human element. Certainly there will be a lot of people eager to take advantage of these new technologies. But one has to wonder what is going to happen if parts of society turn their back on such revolutionary breakthroughs and what that might mean for the future of the planet. One also has to wonder if these breakthroughs will be made available to everybody or just to the rich. I haven’t read a book in a long time that has given me more to think and dream about.

Launching a New Product

At CCG we often introduce clients to new products. Historically our clients had the leisure to introduce products slowly since they were not operating in highly competitive markets. However, today we see speed to market being a major factor in being successful. Since there are many steps needed to launch a new product and because it will touch every part of your organization, it is mandatory that you are organized and have a plan to develop and launch a complex product on time and do it well. Lack of organization will inevitably lead to delays, or worse, to a product that is half-baked and full of problems.

At CCG we are experts at the process of launching new products and many of our clients now include CCG as part of the new product development and launch team. We can provide the needed discipline and the extra manpower and expertise needed to insure that a product is launched on time and is customer-ready.

The following (using the example of launching IP Centrex) is  a list of the basic steps required to launch a new product. This list is abbreviated but demonstrates how launching a new product will touch every part of your organization. Without a clear plan it is easy to get bogged down and delayed.

Steps needed to launch IP Centrex

Define the Product. Define the specific market for the product. In the case of IP Centrex, should you have different packages to reach different parts of the market? (For instance there might be a version for typical small business, a more complex product for more businesses like doctor’s offices, and a product for businesses with a centralized receptionist). Define the equipment and software needed to launch the product. What kind of handsets / functionality do you want to offer? Will you let subscribers use their own devices like smart phones and tablets? Will you support integration of phones and computer systems (Outlook, etc,)? Will you be supporting 911 portability (supporting 911 when the customer moves the phone off-premises)?

Determine Technical Readiness. Is your switch ready to support the product or do you need an upgrade? Will your OSS/BSS support the new product’s billing and operational requirements? If you are going to launch using something other than a softswitch, take the steps needed to choose the right gear and/or partner. Find a 911 mobility vendor to support remote 911 if you go this route. How are you willing to distribute the product – over your own network, over leased facilities, or over the open internet. Anticipate and address any IP addressing issues. Analyze the customer premise network requirements –  premise wiring alternatives, customer demarcation points, VoIP quality assurance capabilities, etc.

Product Pricing. Create a name and branding for the product. Determine the market prices of competing products (trunks for existing PBXs, B1s, traditional Centrex, other VoIP providers, etc.). Determine your pricing strategy (one price fits all vs. pricing based upon what the subscriber is using today). Determine your pricing elements (individual service elements like stations, talk paths, features and calling plans or a more all-inclusive element). Determine if you are going to sell and/or lease handsets as part of the product. Will this be bundled with other products like data or long distance?

Testing. Buy test handsets/stations. Activate and then test each switch feature with the handsets. Create a common or custom profile configuration for supported and chosen handset types. Make sure that you have an easy way to load the profile configurations into handsets/stations. Make sure the chosen features will work with each other (a common problem when combining multiple complex features). Test OSS and billing system.

Regulatory. Are tariff updates needed? If you are going into new markets will you need to open new 911 PSAPs? If sold as a regulated product, how does SLC charge apply? Are there any CALEA issues?

Sales and Marketing Readiness. Define the value proposition for the subscriber. Develop marketing literature. Update website. Develop order form that will capture the complexities of the product.

Internal Training. Train salespeople and CSRs on how to use the product. Train help-desk staff. Train anybody who will install or train on the product. Should your own company be the first test customer?

Customer Training. Develop customer training material/manuals.  Consider a web tool andor video tool. Develop training plan. Will you train every employee or train the trainers? How much will you charge for training? How do future subscriber employees get trained?

Implementation. Develop installation plan/checklist. Order IP stations. Perform any customer premise network changes required. Install and verify data connection(s). Install stations and any managed network equipment required. Develop plan to verify that every station is updated and provisioned correctly. Conduct subscriber training sessions. Ask for subscriber feedback on the quality of the implementation. Render and verify first bill.

NOC/Customer Support/Troubleshooting. How will you handle customer support? Will the first level of trouble shooting be done at the CSR level or by specially trained individuals? Who will have access to the tools and training required to assist subscribers?  Will billing issues and technical issues be handled by different employees or by the same employees?

Ongoing Product Maintenance. How do you stay abreast of new features, services and apps that may benefit your subscribers?  How and when do you introduce updates to subscribers?

Faster Fiber

Exceeding the Speed of Light

Exceeding the Speed of Light (Photo credit: IntelGuy)

Researchers at the University of Southhampton have demonstrated a new fiber technology that allows light to traverse fiber at 99.7 % of the speed of light. This is a vast improvement over current fiber technologies that pass light at about 70% the speed of light.

It has long been understood that the glass in a fiber optics cable slows the light signal and that light can travel much faster through air. The new technology creates hollow fiber-optic cable to create a trapped air-pocket for the transmission media.

An abstract of the research can be viewed in Nature Photonics.

As can be expected, it will be a few years before the faster fiber hits the street. But the market is going to want faster fiber since the primary benefit of the new technology will be the reduction of latency on long-haul fiber routes. Researchers also postulate that the first use for the fiber might be as wiring for supercomputers since electricity ‘crawls’ through wiring at about 2/3 the speed of light.

Kansas Deregulation

On March 27 a bill passed (HB 2201) the Kansas Senate that largely deregulated telephone companies in Kansas from being the carrier of last resort. The bill passed the Senate by 36 – 4 and passed in the House by 118 – 1. In the past telephone companies were required to provide telephone service to most customers who wanted service, with some limitations that applied to extremely rural customers. But the new bill provides a host of ways that can excuse a phone company from providing service.

The bill applies to all regulated telephone companies, but also to a lot of other companies that provide telephone service like cable companies and CLECs.

“I think we’re at the point where we can take one of our largest carriers (AT&T) and treat them as if they’re a wireless carrier or cable carrier,” said Sen. Pat Apple, the chairman of the Senate Utilities Committee.

House Bill No. 2201 (click to open .pdf) is the Senate-approved version of the bill. Since the Senate made changes it will have to return to the House for final approval or else go to a House-Senate conference committee if the House doesn’t accept the Senate’s changes.

It’s unclear how the bill might have changed the role of the Kansas Corporation Commission (KCC) who currently regulates telephone companies. Currently the KCC has the authority to ‘prevent fraud’ but the bill changes that authority to ‘investigate fraud’. It’s not clear if the KCC will have any authority to affect the behavior of a badly performing telecom provider, as is already the case with cellular companies today.

The bill also shrinks the Kansas Universal Fund, which is a pool of money collected from telephone customers in the state and that is used to support rural telephony.

The bill was originally authored by AT&T but was presented to the legislation with a united front by most of the carriers in the state. AT&T has lobbied for similar legislation in many other states. While Kansas is now the first state to effectively remove carrier-of-last-resort obligations, one would expect this to happen in other states. Telephone subscribers have been steadily dropping everywhere as consumers have shifted to cell phones and to VoIP carriers for their telephone usage.

What Do Households Want?

The telecom industry has spent decades bringing residential customers the products we think they want. This has resulted in the ubiquitous triple-play bundle of telephone, data and cable TV. But one has to only spend a little time with a Millenial to know that customers are no longer satisfied with what we have been selling them. While many customers are still buying the traditional products, more and more people are actively looking for alternatives.

And alternatives are showing up. I have one client who has been serving over 20,000 cable TV customers for many years. But for the last year they have been steadily losing 200 customers each month and it doesn’t take a lot of math to see that in a decade they won’t have any cable customers left.

So I am advising clients to start looking at delivering products that people want today and into the future. To help figure out what those products might be, I think you have to start by understanding what customers want today.  I offer the following list of I have made a list of what I think households want today from their telecom provider:

The ability to use multiple devices shared across multiple networks. Customers want to a variety of devices to access the web. They want to seamlessly move from desk top to cell phone to pad to TV to game box. Customers want to be able to move back and forth between the cellular and home WiFi network for voice. Anyone who can facilitate this ability will have an edge.

Faster download and upload speeds. Households want to ability to operate multiple devices at the same time. This requires faster speeds and in some cases QOS.

Mobility. Customers want mobility in both directions, both into and out of the house. They want to be able to start a phone conversation on a cell phone and seamlessly transfer it to a landline when they get home or to the office. They want to be able to access data and do work at home or wherever they are.

Choice of video. Customers want the option to buy only the video they want to watch. And they want to watch it on multiple devices.  

Security and alarm services. Many households want reliable alarm services. They also want to easily operate cameras they can watch remotely.

Integrated entertainment. Customers want to share entertainment content. They want to watch what they want in different rooms and on different devices. They want to be able to move seamlessly from TV to PC to pad to phone. 

Use of cloud-based services. As more and more data is stored in the cloud, customers want an easy way to access and manage the cloud.

The ability to make impulse purchases. Customers want to be able to buy a TV show, a movie, a song and then experience it immediately. People are shifting from buying large monthly subscriptions (cable TV packages) to buying entertainment in small doses.

Help making things work. Households are faced with a confusing array of possible technical solutions and they will value anybody who can make their video, computers, wireless networks and other devices work seamlessly together.