MobileVirtual Network Operators (MVNOs) are those who acquire capacity from large carriers on a white label basis and then rebrand the services offered under their own names. Essentially other large carriers such as CenturyLink or cable providers such as Cox Communications or Networking/VoIP Providers such as Avaya that do not have a wireless infrastructure business would have an easier time qualifying for a MVNO with a wireless carrier. The costs of setting up an MVNO could be steep for a wireless carrier. Initial setup costs for network access and billing/customer service platforms alone can run into at least half a million dollars. Annual revenue run rates of at least $20MM through the MVNO vehicle is probably required for initial discussions to start. Some MVNOs are large and bring in annual revenues of $100MM+.
In such a prevalent environment, it becomes harder to convince the powers that be that smaller entrepreneurial ventures that probably at best would generate between $2MM and $5MM a year in revenues (typically between 4,000 and 10,000 net activations a month) after a 2 to 3 year ramp period would be a good fit for an MVNO partnership. Essentially, a prospective $5MM to $8MM in additional revenues on top of wireless revenues is required for people to sit up and take notice. One space where such revenues maybe prospectively possible is in the mobile advertising space. The massive growth of mobile advertising means that innovative companies that can share with a carrier profits that $5MM to $10MM of their mobile advertising revenues generate would help push such partnerships to fruition. I firmly believe this is the future. Anything less than these revenue sizes, and the partner gets pushed to an aggregator and does not get an exclusive MVNO status with a carrier. An aggregator status really does not give the partner the power to avail the best wholesale rates and instead depends on the negotiation skills and ramp structures of the aggregator. For the carrier, working with an aggregator tends to vest the bargaining power with the aggregator and leads to loss of control in areas such as customer service, pricing, bundled solutions selling, up-selling/cross-selling and so on.
While carriers have not ventured into the non-wireless revenue sharing space yet, a great way to grow future solutions revenues would be to precisely get in such businesses. With rapidly evolving fulfillment platforms, the cost of administering an MVNO to a smaller business might get reduced, and the risks might be largely within acceptable realm.
In such a prevalent environment, it becomes harder to convince the powers that be that smaller entrepreneurial ventures that probably at best would generate between $2MM and $5MM a year in revenues (typically between 4,000 and 10,000 net activations a month) after a 2 to 3 year ramp period would be a good fit for an MVNO partnership. Essentially, a prospective $5MM to $8MM in additional revenues on top of wireless revenues is required for people to sit up and take notice. One space where such revenues maybe prospectively possible is in the mobile advertising space. The massive growth of mobile advertising means that innovative companies that can share with a carrier profits that $5MM to $10MM of their mobile advertising revenues generate would help push such partnerships to fruition. I firmly believe this is the future. Anything less than these revenue sizes, and the partner gets pushed to an aggregator and does not get an exclusive MVNO status with a carrier. An aggregator status really does not give the partner the power to avail the best wholesale rates and instead depends on the negotiation skills and ramp structures of the aggregator. For the carrier, working with an aggregator tends to vest the bargaining power with the aggregator and leads to loss of control in areas such as customer service, pricing, bundled solutions selling, up-selling/cross-selling and so on.
While carriers have not ventured into the non-wireless revenue sharing space yet, a great way to grow future solutions revenues would be to precisely get in such businesses. With rapidly evolving fulfillment platforms, the cost of administering an MVNO to a smaller business might get reduced, and the risks might be largely within acceptable realm.
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