By Jon Horovitz – Jan 13, 2023
As we enter 2023 and close out 2022, many companies are preparing end of year reports and most likely looking at what expenses affected their bottom line, whether it be net income, EBITA or another metric/KPI that they use to effectively manage their business. Our MVNOs are no different and in a world where retail price pressure continues to erode margins, many MVNOs have already taken steps to reduce expenses in their critical operations. I’m not talking about mass layoffs like we saw in Big Tech last year, MVNOs need to look under the covers at each expense line to see what is actually necessary, where reductions can be made and what other products or services can be added or replaced to improve efficiencies.
Let’s take a look at some of the easiest fixes that are out there, without reducing your headcount
As an MVNO, one of your largest expenses is most likely the monthly service bill that you pay to your carrier(s), aggregator, or someone else that is providing you access to the network. You’re probably asking yourself “how do I reduce my bill when I have contracted rates with the only variable being volume?” Good point, let’s peel this back.
Everyone knows that unlimited talk and text have basically become a commodity and costs on this from the carrier are pretty low. What drives the cost up is when MVNOs are purchasing data; whether by the plan which is set by the carrier or by the gigabyte where the MVNO then repackages into their own offerings.
One MVNO owner told me that to purchase gigabytes correctly, you need at least 12-18 months of customer usage data to get the correct algorithms that allow you to profitably purchase these large buckets of data; that’s why most MVNOs simply buy a plan from the carrier and mark it up.
Lower Your Data Consumption, Lower Your Cost
But there are ways to lower your data costs. How, one solution is to reduce your data consumption, thus lowering your monthly “network” expense. Okay, not everyone like Charter and Comcast (and now COX Cable) have extensive Wi-Fi or CBRS networks to offload data traffic to, but there is another option that reduces how much data your customer uses by “right-sizing” the data they receive thus lowering your bill to the carrier.
Sky Peak Technologies www.skypeaktechnologies.com is a company that may just have the secret sauce in reducing your data expenses. How? As Sky Peak CEO Cat Coughran told me “our mission is democratizing mobile content world-wide,” That means, “making something accessible to everyone.” Cat went on to state “Globally, mobile network data traffic has doubled in the last two years, driven by continuing growth in smartphone usage, mobile broadband, and the digitalization of societies and industries. By the end of 2022, the average monthly data usage per smartphone is expected to surpass 15 GB and then grow to 40 GB by the end of 2027.”
Sky Peak Technologies’ solution is to “right-size” the data on mobile devices through an easily installed mobile app (available for operators to offer to their subscribers through Sky Peak Technologies’ Operator Program). Their on-device intelligent content shaping saves resources and money, decreases network burden, expands the efficiency of available bandwidth, and enhances device performance. And, MVNOs and carriers DO NTO HAVE TO TOUCH THEIR NETWORKS AT ALL, truly a money saver for all MVNOs and MVNEs.
Do I Really Need the Newest Handset for My Customers?
Another opportunity to reduce your MVNO’s costs is to look at handsets on the secondary market. As I’ve written before, many MVNO end users simply can’t afford the latest and greatest Apple, Samsung or other handsets, even though there are financing options or major credits from the Big Three carriers when you switch. MVNOs unfortunately can’t offer FREE PHONES or “Get the New iPhone On Us” promotions. But if your customer is willing to take a Certified Pre-Owned (CPO) handset on a model that may be a year or two old, there you have it. You spend less on purchasing brand new equipment and your customer pay less, hopefully keeping them happier and stickier to your brand.
In an article last May, 2022, I reported:
Certified pre-owned items are in near-perfect condition and are resold for a reduced cost. The average person isn’t usually able to tell the difference between a CPO model and a brand new model. If the item is not deemed to be in near factory-level condition by technicians, it will not be marketed as certified pre-owned by the dealer.
There are two reasons why you should consider purchasing pre-owned equipment: money and value for money.
Many of us fork out thousands to get a brand new model of whatever we want, often putting ourselves into debt. Purchasing quality used equipment saves a lot of money and is almost as good as purchasing new for just a fraction of the cost, depending on the model. (Refurbished vs CPO: What’s the difference and which one should I go for? – Mobitronics)
In their July 2021 edition, Consumer Reports gave examples of buying new or CPO Apple and Galaxy products with average savings between $250-$300 per phone. And not surprisingly, according to a spring 2018 survey, Consumer Reports members have been generally satisfied with purchases like those, not to mention their overall shopping experience:
“Among the 3,211 people who reported buying a refurbished phone since Jan. 1, 2016, 82 percent said they were highly satisfied with the product. In fact, in our survey, 67 percent of the owners of refurbished phones said they had no complaints. That’s just a hair less than the 69 percent of new smartphone owners who said the same thing.” Should You Buy a Refurbished Phone? – Consumer Reports
Make Sure You Know What You’re Buying
There are hundreds of companies selling handsets but do you really know what you’re getting? Along with the legitimate folks selling certified product that they get from the carriers or at auction, buying handsets from some companies is like buying the latest release of a current movie from a table in Times Square. Luckily there are reputable people in our industry that provide key data on the handsets and their IMEIs so you can be safe and confident in what you are getting.
One such company is Prolog Mobile who I have the pleasure of knowing. When you can Identify device issues before you sell your devices, you minimize RMA’s and improve customer satisfaction. I spoke with Jon Newman, Co-Founder of Prolog. Jon told me that “used handsets are quite common in the MVNO market as many rely solely on BYOD. It’s important to get the right device data to understand if the device will properly work on your particular MVNO.”
Jon added that many of their customers decrease their RMAs by 20% through the power of their data analytics and decision-making software tools. “It’s a complex process but one we are intimately familiar with.”
What Else Can Lower My MVNO Costs?
There are dozens of things to become more profitable as an MVNO operator and I’ve used this space previously to highlight many of them:
- Retain your employees
- Reduce customer churn
- Sell, Sell Sell accessories
- Offer a DIFFERENTIATOR!
- Train your distribution
- Talk to your carrier about better rates once you’ve exceeded your forecast
All things that you should be doing on a regular basis but the three companies (and I’m sure that there are others) mentioned offer simple, low cost solutions in lowering your costs on a long-term basis. If you’d like to speak with these folks, please give me a call or go to Atrium Unlimited Consulting www.atriumunlimited.com and fill out the contact page.
I’d love to hear what YOU are doing to become more profitable as an MVNO. Reach me at [email protected]
Thanks and Good Selling!