sme mvno

“The need for accurate segmentation to correctly

position a MVNO”.

Paul Wade CMO Smarter Mobile Limited

Introduction

“The need for accurate segmentation to correctly position a MVNO”.

Key factors to consider:• Isolate and target profitable / relevant

segments • Design relevant products and services for the

attractive segments• Identify efficient channels and means for

targeting

The case in question: SME’s the ‘Neglected Segment?’

•An inconvenient segment that falls between Consumer and Enterprise? •Is Data is Integral to an SME MVNO Model? •Is there a place for Private GSM as a solution?

The Business MNVO is the logical next step for the mobile telecommunication industry

Today, the SME customer segments are demanding better value packages, a higher level of service and greater integration with fixed line and data network services. This is driving carriers to re-assess whether MVNO,s targeting business customer segments are still “off-limits” due to their perceived higher ARPU/value.

Market Opportunity

Self Employed Workers Dominate the Business Market

Self-Employed Users

Small Company Users (1 to 49 Employees)

Medium Company Users (50 to 499 Employees)

Large Company Users (500+ Employees)

23% of Total

42% of Total

23% of Total

12% of Total

Data refers to Western Europe (EU 15 + Switzerland)

10,000

20,000

30,000

40,000

50,000

60,000

2004 2005 2006 2007 2008 2009

Self-Employed Users Small Company Users (1 to 49 Employees)

Medium Company Users (50 to 499 Employees) Large Company Users (500+ Employees)

And they Also Dominate the Revenue Picture

Data refers to Western Europe (EU 15 + Switzerland)

CAGR: 8%

CAGR: 3%

Consumer

Business

Corporate

% enterprise revenuesUK, IRE, GER, ITA, NL

Source: market analysis,; Mobile Revolution end-user valuation database; RI End-user researchNote: Split of Business (User) between Corporate and MNC, assumed to be 80% Corporate

Where is the Market Opportunity for a “SME“ MVNO?

Consumer

Business

Corporate

% enterprise revenues

SoHo and SME account for up to 60-70% of revenues

UK, IRE, GER, ITA, NL

Source: market analysis,; Mobile Revolution end-user valuation database; RI End-user researchNote: Split of Business (User) between Corporate and MNC, assumed to be 80% Corporate

Where is the Market Opportunity for a “SME“ MVNO?

SME Business MVNO is not a niche

It is a revenue opportunity.

How do Business users segment ?Large customers need complex solutions

to resolve complex business issues.

How do Business users segment ?Large customers need complex solutions

to resolve complex business issues.

Medium sized customers are more flexible and are more opportunistic.

How do Business users segment ?Large customers need complex solutions to resolve complex

business issues.

Medium sized customers are more flexible and are more opportunistic.

Small businesses are unpredictable in their buying patterns but look for bargains and simple answers to business issues.

SME Segment Profile• Fast – track decision makers, when the business case merits it.

• Early adopters of new products and services.

• Relatively consistent needs across business size and vertical –– Network quality – Value for money– Effective Problem resolution– Expert Technical support

• Critical applications are -– E-Mail from Lap tops, PDA’s and Smart phones– Access to IT systems for sales force– Access to IT systems for field service– M2M services

SME Segment Profile• Fast – track decision makers, when the business case merits it.

• Early adopters of new products and services.

• Relatively consistent needs across business size and vertical –– Network quality – Value for money– Effective Problem resolution– Expert Technical support

• Critical applications are -– E-Mail from Lap tops, PDA’s and Smart phones– Access to IT systems for sales force– Access to IT systems for field service– M2M services

But most of all they are business people

- and want to treated as such

- not some inconvenient segment that falls between Consumer and

Enterprise.

But most of all they are business people

- and want to treated as such

- not some inconvenient segment that falls between Consumer and

Enterprise.

Yes - SME’s are different to enterpriseTo effectively market to this segment takes a determination to compete in a way unique to the segment.

Yes - SME’s are different to enterprise

To effectively market to this segment takes a determination to compete in a way unique to the segment,

So the SME segment is often perceived as being “too difficult” for the existing sales and marketing departments to tackle when they would rather be focussing on either consumer or high end enterprise customers. Most Telco's make the mistake of trying to treat SME’s the same as enterprises, this is wrong because:

• SME’s do not view Mobile as a product or service, to them it is a commodity and one they have to buy out of necessity to run their businesses.

• SME’s are virtually unaffected by Brand, they take telephony as a given in much they same way as water, electricity or other utilities.

• SME’s are not interested in bearer technology, they would be just as happy using Fixed, Mobile, VoIP, WiFi providing it is cheap, reliable and meets their needs.

• SME’s are not interested in Tariffs only the bottom line cost.

• SME’s do not understand the Telco’s obsession for trying to differentiate between Voice and Data, to them it is all one.

• SME’s are not really interested in applications if they need configuring.

• SME’s are too busy running their businesses to have time to learn all about Telco products and services, they do not usually have the luxury of dedicated IT or Telecoms managers.

and are difficult to deal with!

This is what SME’s think they want

This is what they specify “Pull together all information you have, we will select the best

afterwards”

What MNO’s manage to do

This is what SME’s really need

A product that does what is meant to do!

So are SME’s the “neglected” segment?

It is not that the segment is really neglected, it is that it is perceived as being so fragmented and diverse it cannot be easily categorised.

This is a state of mind caused by a fixation on enterprise business.

It is not a view shared by other industries e.g. Banking with the introduction of Small Business advisors, local branch support and low cost business products.

To effectively market to this segment takes a determination to compete in a way unique to the segment, after all you would not expect a luxury car salesman to be able to sell a truck to haulage firm!

To effectively market to this segment takes a determination to compete in a way unique to the segment, after all you would not expect a car salesman to be able to sell a truck to haulage firm!

So the segment is not in fact neglected but is being ignored as being “too difficult” for the existing sales and marketing departments to tackle when they would rather be focussing on either consumer or high end enterprise customers.

What does the SME want from their telephony supplier?

They want a supplier who can offer:– A single point of contact to all business needs with end-to-end

service provisioning and strong support– Mobile services tailored for vertical segments and not just

horizontal– Hosted and managed services, requiring no IT intervention– Delivery of products and not “technologies”– Opex oriented model and not Capex - ‘pay as you grow’, no up

front investment necessary– Strong emphasis on contribution to business:

Productivity, control, cost-efficiency, communication and bottom line

The Proposition: Addressing real SME needs:

The conclusion?Can a SME specific MVNO meet these

criteria?

criteria?Key factors to consider:

Can you

• isolate and target profitable / relevant segments ?

• Design relevant products and services for the attractive segments ?

• Identify efficient channels and means for targeting ?

criteria?Key factors to consider:

Can you

• isolate and target profitable / relevant segments ?

• Design relevant products and services for the attractive segments ?

• Identify efficient channels and means for targeting ?

Private GSM the enabling service ; Micro verses Macro?

Typically more than 70% of calls made in-building

Subscribers consider poor coverage a reason to change networks. • Recent US study of people considering switching operators

– Coverage was 2nd only to cost as a reason for switching– Improved coverage would prevent 46% in switching operators

- Penetration of in-building solutions is very low

10-250 person SME’s are an underserved yet lucrative market segment. – In-building environments, especially offices, are the key business-to-business telecoms market. – Using improved coverage to win a new SME client brings high return

• Multiple high usage users• Possibility to extend contract periods • Prevents existing users from churning• Reduces the need for cannibalistic tariffs

Source ABI Research

Coverage is an issue for SME’s

The Solution? nanoGSM networks?

• GSM is the most prevalent mobile standard worldwide – >1billion devices and growing rapidly– Huge choice of phones, service providers, tariffs

• Picocells give economic deployment into new areas– Makes use of existing IP infrastructure– Integrates with existing network switches– Choice of backhaul standards

• Low CAPEX– Small low cost base stations– Use existing LAN wiring and broadband IP infrastructure

• Low OPEX– Economies of scale for backhaul based on

broadband internet standards

DNC Plus - Home automation Private GSM – a Business solution?

A complete, packaged, Private GSM network solution for use within Offices, Warehouses, Hospitals, Supermarkets, local Government , university campuses and even football stadiums to

• provide optimal GSM network coverage, • support inter-company communications between workers • extend or replace the current PBX infrastructure, and• offer an effective alternative to DECT and Private Mobile Radio installations.

PGSM affords the opportunity to bring significant costs savings as well as business critical continuity on occasions when and where the macro Mobile networks are not available. It is also an ideal solution where rapid telephony deployment is required or where temporary business locations are used, such as in conference centres and outdoor events

Cost. saves money, reduces investment costs, helps manage cash flow• Cost savings -Intercompany-calls at reduced rates -

Outbound calls at fixed line prices • Management and control -Non-company usage can be

effectively managed• Generates revenue from Visitors joining the PGSM scheme.

Utility. works out of the box and delivers business benefits without getting mired in technology or jargon.

Individual value. Makes the working day simpler for employees as well as the organisation, providing employees with tools they value encourages them to be productive.

Ubiquity. applicable and cost effective for all types of employee and removes the time, skills and effort to mix and match different solutions with reduced costs.

Quality. Voice calls are a basic business need –Low call quality and frequent disconnections disrupt working patterns and present a poor image.

Summary of benefits:

Yes – PGSM is an option for SME’s and an opportunity for a MVNO to not only provide a service but also control the infrastructure and own

the customer

Yes – PGSM is an option for SME’s and an opportunity for a MVNO to not only provide a service but also control the infrastructure and own

the customer

The conclusion?“The need for accurate segmentation to

correctly position a MVNO”.Key factors to consider:• Isolate and target profitable / relevant

segments • Design relevant products and services for the

attractive segments• Identify efficient channels and means for

targeting Can a SME specific MVNO meet these criteria?

In the UK, yes; that is why we launched Smarter Mobile

Smarter Mobile LimitedWainscot, Heath Road, Warboys, Huntingdon,

Cambridgeshire PE28 2UWCompany registration Number: 6826239

Thank you.

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