For Service Success, MNOs Must Think Globally
To Succeed With Digital Services, MNOs Need to Think Beyond Their Network
MNOs increasingly face global (digital) competitors for new services. To compete successfully, as connectivity is becoming commoditised, MNOs should challenge both in the global market and in 100% of their local markets. Historically licensed locally and protected by regulation and spectrum allocation, with an implicitly approved market share, to win with digital services MNOs must now cooperate internationally and raise their local competitive game or face relegation to bit carrier status.
Analysis, Inferences and Implications
MNOs historically faced their main competition from other operators in the same country market, and with market entry limited by licensing and spectrum allocation, competition was also relatively limited. Ownership of a licensed network equated to an inbuilt advantage over other players and services that relied on those networks. This encouraged MNOs to dictate to the market in a way that would not work in a fully competitive situation. The early introduction of walled garden portals for internet access, rather than fully open access, illustrated this tendency. The mind-set persists in many MNOs, despite many indications that customers will not accept such dictation (including the universal failure of the walled garden approach). The success of OTT messaging, content and cloud services, despite MNO-erected barriers, illustrates the continuing difficulty of dictating to the market.
The MNO perspective is often network-centric. Solutions are jointly specified, standardised and developed in groups in which competitors participate. Other players (such as Google, Apple, Facebook and many smaller businesses, including start-ups) innovate on the network periphery, with a solution-centric perspective, then use MNOs’ standardised networks to deliver their services or apps internationally and to all the customers within each market. MNOs cannot do the same unless they both cooperate and compete on a level that has not yet been seen.
A single operator approach, even by a major MNO with operations in many markets, cannot deliver the necessary scale or market reach. If this approach continues, MNOs risk being relegated to the status of connectivity provider, with loss of ownership of their customer bases, leading to margin pressures that will necessitate radical re-thinking of their business model.
Fast time to market, international reach and per-market penetration require a new approach. Development needs to originate from a single owner (maybe with partners adding skills, but not complexity). The owner needs to have a solution-centric approach, based on anticipated customer needs and not technical excellence or commercial network protection. MNOs need to deploy their solutions over competitor networks and be open to supporting competitors’ solutions over their own. Key steps towards achieving digital service/app competitiveness include:
- Take ownership of solutions-centric development for network agnostic apps and services;
- Adopt a franchise distribution model, even with local competitors, both for own-developed and external solutions;
- Restructure to separate the local connectivity provision business and have it deliver service to a customer-owning, solution-centric entity that addresses the world beyond the home network.