White paper December 2011

MVNE SERVICE DELIVERY W hen to buy solutions and when to lease ser v ices

www.symsoft.com

e x ecuti v e su mm a ry
The Mobile Virtual Network Operator (MVNO) business model offers an attractive way to quickly launch new mobile brands in the marketplace. Market oriented companies can capitalize on existing market knowledge and customer relations by adding mobile services without the need to build a new mobile network. Instead, MVNOs rely on services and support offered by established mobile network operators (MNOs) and Mobile Virtual Network Enablers (MVNEs). To be successful in the role as an intermediary between MNOs and MVNOs, MVNEs must balance the needs of the two parties and meet both their expectations accordingly. A key expectation of the MVNO is typically to be able to focus on commercial activities such as marketing, brand development and customer loyalty programs, leaving back-end enablement and operations to the MVNE. To meet the demands from MVNOs operating in dynamic, fast changing mobile environments, the MVNE platform and service offer will need to support rapid launch of new services; in new markets and existing markets. A third key expectation from an MVNO on its MVNE partner is the possibility to minimize the initial investment along with a total cost of ownership (TCO), as a result of economies of scale. MNOs on the other hand are likely to embrace the MVNO business model in an attempt to secure increased usage in their mobile network. Doing this, the requirement will be to secure that new ventures have minimal impact on the MNOs existing business and can be supported within established processes. These two sets of needs have an impact on how the MVNEs choose to implement their service offer. Deciding what parts of the solution they are to buy and operate themselves and when to rely upon services provided by the mobile operator partner is an important part of the service offer design. MSC and HLR operations typically require a limited number of MVNO specific configurations. This means that the MVNE can successfully rely on the MNO services as a way of grasping the opportunity of economies of scale. Requirements for flexibility and efficiency on the other hand make it imperative for MVNEs to provide online charging capabilities and business support systems. Dedicated messaging, mobile data and customer interaction capabilities also strengthen an MVNEs position by enabling quicker launch in new markets and quicker configuration of subscriber services.

December 2011

the mvne in the mobile ecosystem

As new Mobile Virtual Network Operators (MVNOs) are formed all over the world, the market for Mobile Virtual Network Enablers (MVNEs) is growing. The role of an MVNE is to provide services such as provisioning, administration, operations, business and operations support systems to MVNOs to enable them to offer mobile network services. In this way the MVNO is able to focus on its core strengths in terms of brand development, customer loyalty and marketing, leaving back-end enablement and operations to the MVNE. As an intermediary between mobile network operators, running the underlying mobile network, and MVNOs, MVNEs can realize significant economies of scale. The result is an operation that is often both more comprehensive in terms of functionality and more cost-efficient than what can be achieved by an individual MVNO. Success as an MVNE depends on a number of strategic decisions. One of the most significant decisions with long-reaching consequences is choosing what components of service delivery to handle directly as an MVNE and where to rely on existing mobile network operator services. On one hand, separating the operating systems from mobile network operators platform enables MVNEs to offer increased flexibility serving their MVNO customers. On the other hand, reusing an existing infrastructure is a key mean for minimizing the initial investment as well as recurring costs of ownership. A third aspect might be the perceived benefit among MVNEs to minimize the number of suppliers, decreasing business complexity. This white paper will discuss the MVNE strategic buy-or-lease decisions from three different angles:  What criteria could be used for drawing the line between what solutions to buy and what to lease as a service?  As a result, what service delivery capabilities should an MVNE consider operating themselves to maximize flexibility and efficiency and what resources are best outsourced to a mobile network operator partner? What demands should an MVNE put on the different elements they use to deliver service?

December 2011

Th e ba l a nci ng act of th e mvn e

For MVNEs to be successful in the role as intermediaries between mobile operators and MVNOs they need to add value. How this value is added varies between different MVNOs and mobile operator partners. However, it is typically based on the MVNEs superior market knowledge and established position in the value chain, in combination with being more technology savvy than the served MVNOs and the ability to lower the initial investment and shorten time-to-launch for new MVNOs.

serving mvno s
MVNEs build their success on helping MVNOs succeed in the mobile market. It is therefore of paramount importance to understand and meet the needs of these MVNOs. Small initial investment As with most companies entering a new business, MVNOs generally seek to minimize their initial investment. Therefore, they often prefer to let other actors own and operate technical infrastructure. Marketing flexibility MVNOs as market oriented companies are often strong in identifying and targeting specific market segments. They depend on their MVNE and MNO partners to provide them with tools to create attractive products and campaigns. It is of importance that these tools are as flexible and adaptable as required to secure market agility. Short time-to-market Short time-to-launch for a new MVNO gives the ability to react more swiftly to opportunities arising in different markets. This extends both to launching services in entirely new markets as well as quickly rolling out new offers and campaigns in existing markets. Information integrity As any business MVNOs have an interest in protecting their information, be it customer data or details of its services, products and campaigns. When MVNOs manage information using systems owned and operated by others, they have to know that their information is protected and not in any way shared with other MVNOs. Operational know-how MVNOs often focus on the market side of the mobile service business. As such, they often lack deeper technical knowledge and awareness about the possibilities with the services they offer. Therefore, they rely on their MVNE partners to provide them with understanding and guidance in relation to the services that they offer. Therefore, they rely on their MVNE partners to provide them with understanding and guidance in relation to the services that they offer.

December 2011

meeting mobile operator requirements

Mobile operators interest in an MVNO/MVNE business model is mostly associated with an existing overcapacity in the operator network. Sub-leasing mobile services to a third party rather than promoting those more aggressively directly to the market can be a way of avoiding cannibalization of an established operator brand. For mobile operators, partnering with MVNO players can also represent an opportunity of tapping into new market segments, with specific demographics or go-to-market models. As the provider of mobile network access, the mobile operator becomes a key partner for MVNOs and MVNEs. This in turn makes it important for MVNEs to meet the requirements of mobile operators to assure a stable, mutually beneficial, relationship. Conformance to existing processes To secure stable operations and qualitative service delivery, most established mobile operators have elaborate processes to handle changes to their systems. Compliance with these processes is generally required from MVNEs and other parties that connect to the operator network. Minimal impact on operator traffic The traffic subleased from the mobile operator to an external MVNO/MNVE partner is typically a marginal part of the mobile operators overall business. It is therefore important that new initiatives, such as MVNOs operating on their network, do not affect the operators current business and customers adversely.

December 2011

procuring mvne service delivery solutions

The needs of MVNOs and the requirements of mobile operators both have implications for the procurement of MVNE infrastructure. They both influence the scope of functions to be offered by the MVNE and influence the requirements on each specific component of the solution.

Determining scope of MVNE infrastructure

The first question to answer when analyzing solution needs for an MVNE is the functionality scope, i.e. what functionality the MVNE should provide and to what extent it should rely on the capabilities of mobile operators. Two partly opposing interests come into play when determining scope. On one hand, MVNEs want to give their MVNO partners the highest degree of flexibility, service quality and information integrity. On the other hand, it is desirable to maximize economies of scales and optimize cost-efficiency to improve bottom-line results. MVNEs can generally maximize MVNO value by operating their own systems for service delivery, rather than relying purely on existing mobile operator solutions. When functionality is implemented directly by the MVNE, administration and configuration is also decoupled from the processes of the mobile operator. This decreases time-to-market for MVNOs and improves control of services and MVNO information. At the same time, the mobile operator generally has a larger number of subscribers and can therefore create better economies of scale. By using spare network capacity the marginal cost for adding more subscribers is usually relatively small. Striking the balance between MVNE-based and operator-based solutions is therefore a question of identifying functions for which the value of the flexibility offered outweighs the cost of operating a system separately. Each business case and each partnership between MVNEs, MVNOs and mobile operators is unique. Still, some general guidelines can be used when making system investment decisions: For network elements with a limited need for customer-specific configuration or systems that are more rarely changed once in operation, relying on mobile operator systems is typically preferred to increase operational efficiency. MSCs and HLRs are important examples of such elements. For elements responsible for service delivery that require charging integration, it is generally best to keep them in the MVNE network. Managing standardized traffic protocols instead of integrating with operatorspecific charging protocols allows MVNEs to quickly connect to new mobile network operators. For elements that need to be configured for each MVNO, MVNEs are typically better off operating their own equipment to retain flexibility, data integrity and availability towards MVNOs. For business support systems and CRM close to the operations of the MVNO, the division of responsibility between the MVNE and the MVNO vary from case to case. For MVNOs that already have established customer relationships (e.g. retail chains), it may be preferable to extend certain parts of BSS and CRM infrastructure in the MVNO to provide a unified interface towards end customers.

December 2011

Requirements for specific components

From these general rules, elements suitable for MVNE operation can be identified along with the needs to consider when procuring them. This section will investigate how separating these elements can make MVNOs more competitive in the market, and the demands put on them. Online Charging System Online Charging System (OCS) manages rating and charging for all services offered by an MVNO. It handles pricing, packaging and service control, all crucial to marketing mobile services. Operating a separate MVNEbased OCS gives MVNOs the ability to act quickly in the marketplace, without the need for a hosting mobile operator to reconfigure its systems. To support MVNOs in making the most of their business, it is essential that MVNEs use an OCS solution that enables flexible creation of products and campaigns. To give MVNOs the agility they need, it is also important to choose a charging system that supports multi-network and multi-country SMSC/MMSC SMS and MMS are today important services for practically all actors in the mobile market, adding significant revenues to basic voice services. Operating separate solutions for service delivery simplifies integration with mobile network operators. Instead of adapting the OCS to the specific charging protocols used by the MNO, standards-compliant traffic flows can be rerouted to the MVNE infrastructure without operator-specific adaptations. By operating dedicated SMSC and MMSC nodes, MVNEs can better guarantee service quality and offer advanced messaging functionality. To fully simplify integration, it is valuable to choose SMSC and MMSC solutions that are prepared for integration with the chosen OCS. As messaging services are still evolving, it is also of value to work directly with vendors with experience in this field. PGW/GGSN The Packet Data Network Gateway/Gateway GPRS Support Node (PGW/GGSN) is an important enabler for mobile data services, and there are several reasons for operating it outside the operator network. In the GGSN case, redirecting the traffic flows to the MVNE simplifies charging integration. Instead of integrating with operator-specific charging protocols, the MVNE only has to integrate with well-defined traffic protocols supported by most GGSNs. With full control over its configuration, it is also possible to quickly create advanced data services with access to content and services not accessible over the Internet, as well as allowing regular Internet access. The requirements on the PGW/GGSN depend on the nature of the subscribers that an MVNO seeks to target. For MVNOs primarily interested in offering low-cost/low-price basic data services, relying on the mobile operator PGW/GGSN might be the best option. However, MVNOs that seek to create more advanced offerings and use mobile data services as a market differentiator can increase flexibility and shorten time-tomarket significantly with an MVNE-operated PGW/GGSN.

December 2011

Voicemail, IVR and USSD MVNEs can provide a better service to MVNOs by operating subscriber-facing systems such as voicemail, IVR and USSD. Operating these systems ensure that MVNO customers can set up their services quickly without having to handle sometimes complex processes in the network operator. Business Support Systems The ability to control Business Support Systems (BSS) is important to all providers, especially customeroriented MVNOs. Although the technical requirements are often less demanding than for MNOs, relying on mobile operator systems would still introduce delays when updating BSS capabilities and configuration. Customer Relationship Management Customer Relationship Management (CRM), i.e. the long term handling of all subscriber relations is a fundamental part of the market-driven MVNO business. To be able to satisfy subscribers, MVNOs must be given access to versatile CRM tools or interface to extract and modify information from the MVNEs.

December 2011

success story: simfonics orchestrating an mvno symphony

In spring 2006 two experienced executives from the mobile operator business founded Simfonics, an international Mobile Virtual Network Enabler (MVNE). The vision was to facilitate the establishment of new Mobile Virtual Network Operators (MVNOs) around the world by offering all key services needed under a managed service business model. The Simfonics founders went in search of an MVNE platform that would be instrumental in realizing the vision. The objective was to find a solution that would let Simfonics offer all key services needed by new MVNOs from one integrated platform, independent of the underlying operator network. After a thorough evaluation process and in-depth discussion with leading telecom vendors, charging and messaging expert Symsoft was selected as the most suitable candidate. Today, the Symsoft MVNO platform provides the basis for a true multi-tenant solution where each of the Simfonics customers business is securely managed in a dedicated partition. Offering GSM services, prepaid and postpaid charging, SMSC, MMSC, IN routing and voucher management from one integrated service delivery platform provides a number of business benefits to Simfonics and their customers.

focus on total cost of ownership

Simfonics customers pay for the service based on their usage, without any upfront technology investment. In this way businesses that start out small get access to a cost-efficient, full service portfolio from day one. Tapping into the Simfonics MVNO managed service concept also means that costs and staff related to administration and management of the solution can be kept to a minimum. - Symsofts integrated approach lets us offer cost-efficient services, without compromising on functionality or quality. Being able to manage a number of MVNOs from one administrative platform further strengthens our financial case, explains the Simfonics co-founder and now CEO Uwe Lhrig.

reducing time-to-market
Another benefit of offering services from an integrated platform is the possibility to cut time-to-market. With the managed MVNO platform Simfonics have assisted new MVNO-based operators from initial planning to commercial launch in only three months. The flexibility of the service delivery platform also allows for new service offers and campaigns to be created in minimal time. - The MVNO platform we have chosen gives us the flexibility we need to support our clients in launching new services and developing their market offers with competitively short time-to-market, explains Mr. Lhrig. Since the beginning in 2006 Simfonics have supported more than 10 new MVNO businesses around Europe: from business case development, concept testing and business processes definition to solution integration and commercial launch.

10

December 2011

symsoft your mvne and mvno partner

charging and messaging experts
Symsoft specializes in charging and messaging solutions for mobile operators globally, enhancing their competitive positioning and enabling them to embrace new revenue opportunities. Our integrated solutions for MVNEs and MVNOs include all components needed to efficiently build and run a mobile business including online charging, mobile data, messaging services, enterprise messaging, voice mail services and solutions for end user self management and voucher management. All elements are designed for hosting outside the operator partners infrastructure while being fully integrated to the leased services in the underlying mobile network.

one platform modular components

Symsoft MVNO solutions are designed to support MVNEs and MVNOs in a dynamic, fast changing mobile market. The complete portfolio is based on a single platform to simplify operation and maintenance. A common administrative client can be used to access settings and information for all functions and services. The modularity of the solution allows for easy tailoring to individual MVNO requirements, whether it relates to charging or value-added services. Once installed, the solution is easily extended with new functionality in parallel with already installed applications. The system scales linearly to handle future subscriber growth in a cost-efficient manner.

a proven concept
We have over 20 years of experience in helping MVNOs and MVNEs to succeed in the mobile marketplace. Our MVNO/MVNE solutions have been implemented and verified with network elements from all major vendors, making them well prepared for integration with mobile operator networks. With a strong product portfolio, an intimate knowledge of telecommunication networks and applications, and a proven track record, Symsoft is a reliable partner for MVNEs and MVNOs wanting to succeed in a fast-moving market.

December 2011

11

Symsoft is a trusted charging and messaging expert with over twenty years of industry experience. Symsoft provides solutions enabling operators globally to stay ahead of their competitors in an increasingly competitive telecom market. Its innovative products are used by leading operators such as America Mvil, Millicom, Polkomtel, Saudi Telecom, Telefnica, Telenor, Tele2, TeliaSonera and 3 in more than 30 countries, serving over 120 million subscribers. www.symsoft.com

Corporate Headquarters Symsoft AB Kista Science Tower Frgatan 33, PO Box 1219 SE-164 28 Kista, Sweden Tel +46 8 566 166 00

Middle East & Africa Symsoft MEA Dubai Internet City P.O. Box 500649 Dubai, United Arab Emirates Tel +971 4 36 16 637

Americas Americas Symsoft Inc. 5700 Granite Parkway, Ste 200 Plano, Texas 75024, USA Tel +1 972 731 6708

Asia Pacific Symsoft Asia Pacific 9 Temasek Boulevard #31-02 Suntec Tower Two Singapore 038989 Tel +46 8 566 166 00

2011, Symsoft AB. All rights reserved.

15 December 2011