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Cellular gets wings

Jan 25 2011 14:43 Simon Dingle

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CELL C has a new strategy that involves opening up its network to smaller mobile virtual network operators (MVNOs).

First in line is Red Bull Mobile. It's an interesting strategy, but for the virtual operators themselves success will depend on how they carve their niches.

Red Bull Mobile is, according to speculation, preparing to launch in the South African market. The MVNO operates in a handful of European markets, where it apparently does quite well.

Red Bull will be the third commercial MVNO in South Africa, following Virgin Mobile and Econet. Telkom Mobile also operates as a hybrid MVNO, relying on MTN's network where it does not have its own towers for 8ta.

Virgin Mobile is partly owned by Cell C, although the latter is selling its 50% stake in the MVNO to Allied Mobile.

I'd argue that Virgin hasn't done anywhere near as well as it could have, because it hasn't differentiated itself in terms of service - something Red Bull will also have to do if it is to enjoy success in SA.

MVNOs can almost never compete on price, given the nature of their business. They're piggy-backing on the very networks they will have to combat in the market. It's difficult to beat Cell C at the price of calls when you're beholden to them for services.

Difficult, mind you, but not impossible. For the most part, MVNOs have to look elsewhere for their competitive edge.

One obvious place to do this is in customer service. Cellular operators are notoriously bad when it comes to their contact centres and while the likes of MTN and Vodacom have made strides in correcting this, there is still scope for premium services.

People pay more for private banking because it offers them higher service levels and convenience. I'd like a cellular operator that takes the same approach.

Another way MVNOs can differentiate is in terms of content and additional services. Cricket is a network in the USA that offers an all-you-can-eat music download service as part of its connectivity agreement. It has decided to target a niche market of young, hip customers who want an affordable smartphone that also keeps their music collection current.

Red Bull Mobile also targets a niche in the other countries where it operates. As with its parent brand, it goes for young people who are into extreme sports with images of snowboarding and motor sports on its website.

Another opportunity for MVNOs is to create ecosystem products that tie in with other operations for their brands.

In the case of Virgin, it could leverage Virgin Money, Virgin Active, Virgin Atlantic and its other service providers to deliver a powerful loyalty system and, perhaps, unified billing where customers benefit from staying with the brand throughout its subsidiaries.

Some of this does happen, but Virgin doesn't take the concept far enough.

Virgin Mobile also drops the ball in terms of customer service. A pity, since it is the most reasonably priced operator in South Africa for people who travel internationally, creating a potential niche that defies my previous statement about competing on price.

Attracting MVNOs is an interesting way for Cell C to fill up its brand new network and not something its competitors are interested in. Vodacom and MTN aren't about to open the floodgates to third parties in the same manner, given the complexities of their overloaded networks.

So soon you'll be able to get a cellphone from the same people who make your energy drinks. And it'll be interesting to see what other brands follow.

Hopefully Virgin Mobile will buck up to the competition - because I'd still like to do business with it, if it can pull its service together.

 - Fin24
 

virgin  |  econet  |  cell c
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