How do you avoid the race toward the bottom as an MVNO?

Since I joined the telecom industry about three years ago, I’ve spoken to dozens, if not hundreds, of Mobile Virtual Network Operators (MVNO) founders. These conversations have been rewarding in many ways, as they have given me a unique insight into what separates winners from losers. Surprisingly, many MVNOs tend to make the same mistakes. This is why the first thing you need to do as an aspiring MVNO entrepreneur is to learn from everyone who has gone before you. This way, you have a higher probability of tipping the scale in your favour and, hopefully, joining the winners.

It’s common for humans to think that we are unique and will succeed simply because we are who we are. This overconfidence in one’s capabilities is a prevalent trait among entrepreneurs known as optimism bias. My non-scientific research shows that this is the main predictor for MVNO success. The MVNO space is highly competitive, so without that grit and touch of naivety, you will most probably not even get to the launch stage. Even though a good dose of optimism will take you far, it is not enough to join the winner’s long term. Below, I’ll share some of the most common pitfalls, how to avoid them, and what questions you should ask yourself before kickstarting this venture, or perhaps not.

Don’t set out to compete on price alone

The telecom industry offers commodity services, so you must first decide how to distinguish yourself from the rest of the market. These days, many founders look to the successes of Mint mobile (hello Mint effect) and want to do the same thing as Ryan Reynolds, who sold the company to his network provider T-mobile for one billion USD. Most people tend to forget that they are not PR geniuses or comedians. On top of that, they do not have 40m followers on multiple social media platforms, and they underestimate the work it takes to get a good network deal to keep the operating costs down. Considering all this, it means that for most entrepreneurs, competing solely on price is a race towards the bottom.

So, how can MVNOs differentiate? First, let’s look at some of the more common mistakes.

1. Customer experience

I see many MVNOs neglect the customer experience and the problem you are trying to solve.

Customer experience does not equal design in the form of a logo, colours and font. Customer experience is how your customers interact with your service in every touchpoint, whether purchasing a mobile sub, talking to support, or interacting with your service in another way. You must design your service from the customer’s perspective, not vice versa.

When Martina and Jonas, founders of Telness Tech, first set out to launch their MVNO business Telness back in 2016, they crafted over 200 customer journeys.

The telecom industry is infamous for bad customer experiences, so it does not take that much to stick out in this regard.

2. Tech for tech’s sake

Large carriers are notorious for focusing on technology before deciding what problem they are solving. Unbelievably, I see this way too often with MVNOs, too.

Don’t craft endless request for information (RFI) documents that include every feature you can think of. Decide what your value proposition will be and what your customer journeys will look like. Then, you can start shopping around for the right platform and team to support your venture.

I must say that I am entirely mind-boggled by how obsessed the telco industry is with technology and how often engineers are allowed to lead new initiatives without any support from product teams or more commercial roles.

Tech is important, but it is a means to an end, not the purpose itself.

3. “Me too” solutions

Let’s get back to Mister Reynolds here for a second. Of course, you should seek inspiration from others. That is the essence of not making the same mistakes as everyone else. But again, the telco industry is infamous for “me too” solutions. Just think about it: How often do you see a carrier or an MVNO launch a feature, and just weeks later, do the rest of the providers in the market follow?

Think about your unique prerequisites for success. How does your network look like? What are you good at? How can you leverage that?

I’m sure Ryan did the same when he came up with the value proposition and, more importantly, communications for Mint mobile.

Start by asking yourself the following questions.

• Have you identified certain demographics with a specific need that will pay a premium for your services?
• Do you have a great relationship with your network provider?
• Do you have an existing brand with high recognition and trust that you can leverage?
• Can you consider making the cake bigger instead of fighting for the same customers as everyone else? Perhaps you can consider skipping the consumer market and look at the underserved small- to medium-sized businesses. 

Great, I’m sure you’ll now go back to the drawing board and craft a clear and unique value proposition to wipe the competition off the floor.

In the next blog post.

I’ll share some dos and don’ts on bringing your value proposition to the market.