MVNO services

[paddy84]

Out of interest; does any body know how much companies like O2 charge firms like Giff Gaff for MVNO services? Is it a flat fee, or variable depending on usage?
Cheers.

 

[paddy84]

Anyone got any idea?

Thanks

 

[Ben8472]

There is a setup fee involved and also costs to produce the sim cards (MOQ's apply).

It's a long and expensive process. If you wish to go to a mobile network directly, I recall the costs being around £250k (this was some time ago, it's possible it has changed).

You can lower your costs by going to an MVNA (Mobile Virtual Network Aggregator), these companies have already gone to the trouble of setting up with the mobile networks and can essentially allow you to take advantage of their connections and agreements that are already in place.

An MVNA will charge you a much lower fee of a few thousand.

You still need to pay a sum to have sim cards produced (with MOQ). However the MVNO will be completely under your brand - no mention of the MVNA brand anywhere.

In regards to calls, texts and data, you can either pay the MVNA a wholesale rate per text, minute or MB or you can handle this yourself.

If you wish to handle this yourself, the MVNA will route calls, texts and data to your equipment where you will terminate the messages through your own bulk sms provider, the calls through your own SIP provider and data will be routed to you via an L2TP session where you can also assign IP addresses to sim cards from your own IP ranges and provide internet access.

Even if you wish to handle all of the services yourself, expect to be charged rates by the MVNA/Mobile network because you are still using capacity on their towers and systems before the data/calls/texts get to you.

I would very much advise against investing in an MVNO unless you already have a very large customer base to market it to.

The only successful MVNO's are the ones with existing bases, Tesco, Sainsbury’s, ASDA, Virgin. A brand new start-up will struggle.

Don't fall in to the trap of thinking because everyone has heard of Giffgaff that they must be a success, Giffgaff is not a success. It has a long way to go.

If you want an MVNA recommendation, check out aql.

Hope this helps.

Ben

 

[paddy84]

Thanks Ben for the extremly informative reply, it's not
actually a business I am involved in, I was chatting to somebody the other day about these companies and I just wondered out of interest how much the big 5 charge companies like tescos etc for mvno's.

Regarding giff gaff, when you say they are not a success, And
they have a long way to go, what are they doing wrong / not doing that asda etc and the more successful mvno's are doing right?

 

[Ben8472]

Regarding giff gaff, when you say they are not a success, And they have a long way to go, what are they doing wrong / not doing that asda etc and the more successful mvno's are doing right?

Giffgaff are not doing anything wrong, they offer a good service at a competitive price point for the pay as you go market. It's just very difficult to build a customer base from scratch - certainly in mobile services.

In the pay as you go market the average profit per customer will be pennies each month, you need A LOT of customers to make money.

Giffgaff are not yet at that stage.

Tesco on the other hand have thousands of stores and millions of customers to market to and today Tesco Mobile has 2.7 million subscribers and is just 300,000 subscribers behind Virgin Mobile who have been around a lot longer.

If you compare Tesco Mobile subscriber stats between 2008 - 2011, the growth rate is exceptional - having thousands of stores to use as marketing outlets is the reason why.

You could start a company and spend £20m on advertising and you would still not get even 1% of the exposure Tesco can conjure up overnight with a simple roll out of advertising across their store network.

I suspect Tesco Bank when it launches (the retail bank they are intending to launch) will be a success for the same reason, they will have the largest branch network of any UK retail bank overnight without having to lay down a single brick.

Although Giffgaff is the first non-big-brand MVNO that I think will be around for a while - the social aspect of their business, certainly in terms of customer acquisition is very interesting and could be a winner.

Ben

 

[british steve]

GiffGaff should be around for a long time! They are owned by 02. Tesco Mobile is a 50/50 joint venture between Tesco and 02

 

[frank.zhang@uc]

There is a setup fee involved and also costs to produce the sim cards (MOQ's apply).

It's a long and expensive process. If you wish to go to a mobile network directly, I recall the costs being around £250k (this was some time ago, it's possible it has changed).

You can lower your costs by going to an MVNA (Mobile Virtual Network Aggregator), these companies have already gone to the trouble of setting up with the mobile networks and can essentially allow you to take advantage of their connections and agreements that are already in place.

An MVNA will charge you a much lower fee of a few thousand.

You still need to pay a sum to have sim cards produced (with MOQ). However the MVNO will be completely under your brand - no mention of the MVNA brand anywhere.

In regards to calls, texts and data, you can either pay the MVNA a wholesale rate per text, minute or MB or you can handle this yourself.

If you wish to handle this yourself, the MVNA will route calls, texts and data to your equipment where you will terminate the messages through your own bulk sms provider, the calls through your own SIP provider and data will be routed to you via an L2TP session where you can also assign IP addresses to sim cards from your own IP ranges and provide internet access.

Even if you wish to handle all of the services yourself, expect to be charged rates by the MVNA/Mobile network because you are still using capacity on their towers and systems before the data/calls/texts get to you.

I would very much advise against investing in an MVNO unless you already have a very large customer base to market it to.

The only successful MVNO's are the ones with existing bases, Tesco, Sainsburys, ASDA, Virgin. A brand new start-up will struggle.

Don't fall in to the trap of thinking because everyone has heard of Giffgaff that they must be a success, Giffgaff is not a success. It has a long way to go.

If you want an MVNA recommendation, check out aql.

Hope this helps.

Ben

Hi Ben,

I saw this chat was on 2011, just want to check if the situation is still the same or not, as new technology like eSIM coming out, what is the minimum cost of setting up a MVNO in the current market situation?

Frank

 

[MikeJ]

Ben8472​

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Last seen Apr 13, 2017

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