Impact Pricing Podcast

Ep176: What You Need to Know About the Market of Mobile Virtual Network Operators with Magdalena Bay

Magdalena Bay has been working in business development for eight years now. She is an expert in the MVNO market, but outside of work, she loves spending time with her kids and showing her golden retrievers at dog shows.

In this episode, Magda educates us on how Mobile Virtual Network Operators (MVNOs) work, especially with how Mobile Network Operators (MNOs) and MVNOs price their offers.

Why you have to check out today’s podcast:

  • Learn what the MNO and MVNO are all about
  • Understand how MNOs and MVNOs provide value to their customers
  • Find out how pricing works in the MVNO market

“You need to give time to your customers so they can adjust to the new models you are trying to introduce. And maybe, sometimes, the strategy that you’re implementing won’t work in the beginning, but if you just wait little by little, then it can bring the results.” 

Magdalena Bay

           

Topics Covered:

01:45 – How Magda got into pricing

02:10 – Learning how Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs) work

07:21 – Why pricing in the MVNO market is interesting

09:27 – Sample scenarios of how MVNO provides value to customers

11:34 – How pricing in MVNO works

14:26 – What it means to play on a breakage when you’re in the MVNO market

16:20 – Magda asks Mark: “How do you approach your consulting when you’re in a totally new industry for you?”

18:18 – Does Mark have plans of getting experience from other countries and industries?

23:14 – Magda’s piece of pricing advice for the listeners

Key Takeaways: 

“Pricing here is extremely difficult, in the sense that obviously, some of the customers wants to have everything the cheapest possible way. And in this setup, the infrastructure and building, everything cost your investment. You have to get your return on this investment. And as you mentioned before, MVNOs are always competing with these big boys, with MNOs, so this is almost impossible to be on the same pricing level.” – Magdalena Bay

“Assuming that you would get also unlimited plans from the MNO, you are very limited on how much you can earn, because you are only limited to this, let’s say, two zloty per bundle or two euro per bundle – just any number I’m saying now – and you can’t grow on this, if you know what I mean.” – Magdalena Bay

People / Resources Mentioned:

Connect with Magdalena Bay:

Connect with Mark Stiving:   

Full Interview Transcript

(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)

Magdalena Bay

You need to give time to your customers so they can adjust to the new models you are trying to introduce. And maybe, sometimes, the strategy that you’re implementing won’t work in the beginning, but if you just wait little by little, then it can bring the results.

[Intro]

Mark Stiving

Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike.

If you’re looking for a new pricing role or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.

Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the distributed relationship between them. I’m Mark Stiving, and today, our guest is Magdalena Bay. Here are three things you’d want to know about Magdalena before we start.

She has been working in business development for eight years. She is an expert, maybe, in the MVNO market, which we’re going to learn all about. And my favorite thing is she shows her two golden retrievers at dog shows. I love dogs.

Welcome, Magdalena.

Magdalena Bay

Hi, Mark. Thank you for your invitation.

Mark Stiving

Oh, it’s going to be fun, I hope. And you’re going to teach me something that I know nothing about, so this will be awesome.

Let me start with how did you get into pricing?

Magdalena Bay

Well, actually, I’m not really into pricing, but I started to learn it when I started to sell, and then it just came naturally.

Mark Stiving

Pricing came naturally?

Magdalena Bay

Yeah.

Mark Stiving

Pricing doesn’t come naturally to anybody.

Magdalena Bay

Well, this is the normal thing for you, right?

Mark Stiving

It is for me, but I’ve studied it hard.

So, we’re going to talk today about MVNO, and in all honesty, I had no idea what it was. I googled it just so I could know what it was, but would you please describe for me and the listeners, what is MVNO?

Magdalena Bay

Well, this is Mobile Virtual Network Operator, and basically, just to make it very simple, on the market, you have MNOs, which are Mobile Network Operators, and these are all these big boys that are providing you with your mobile subscriptions.

Mark Stiving

Here in the US, we would call those AT&T and Verizon.

Magdalena Bay

Yeah, exactly. The thing is that they have all the infrastructure, and most important part is that they have the radio network.

Mark Stiving

Magdalena, wait a second. Just to make sure we’re not leaving out all the rest of the countries, can you list a few more really big ones internationally?

Magdalena Bay

Yes. So you have Orange, you have T-Mobile, you have Free, which is present in different countries. So basically, these are the big carriers that are providing the connectivity, but the thing is that they should have all the infrastructure. Most important, they should have the radio network.

And then we have Mobile Virtual Network Operators (MVNOs), and these are these guys that need to go to the MNO and get some of the infrastructure from them. What I mean is that they have to get the radio. And depending on the model, they have some own elements at their side. And they start it also to provide the connectivity, but still using the house operator.

And this business started to be very popular, because it gives you some competitive advantages. The most important part is that you can offer services under your own name, under your own brand. You bind your customers by building some loyalty programs. And obviously, the thing is that you can have some additional services that the big operators, they just don’t have the capacity to offer it.

Mark Stiving

Okay. So, let’s go through this for a second. First, do you know any MVNO names in the US?

Magdalena Bay

Yeah. Well, for example, Teleco. This is a very niche company, I believe. They are actually working on a US market and on a Brazilian market. And as far as I know, they are offering some connectivity for those who are traveling between these two countries.

Mark Stiving

Okay. And while we’re talking, I’m looking it up just to see if I could find some. So we have some names like Affinity, Airvoice, Assist Wireless, Beast Mobile. These are all small little companies that we may not know, per se, and yet they’re licensing or renting space on Verizon and AT&T and T-Mobile’s networks. Is that right?

Magdalena Bay

Yes. Exactly.

Mark Stiving

Okay. And so now, tell me why – I love the name Beast Mobile so let’s talk about that one for a second. Magdalena, we’re going to talk about it as though we know it. But why would I, as a consumer, buy from Beast Mobile instead of from AT&T?

Magdalena Bay

Well, we are assuming that AT&T – this is a big company – they don’t have this huge capacity, so maybe their customer service is not that good anymore, and waiting in the line is pretty annoying for you. Maybe you are looking for some additional services, and the plans, you think they are a little bit too traditional, not offering you all these new trends that are coming up. Or maybe, I don’t know Beast Mobile, but there are, for example, some MVNOs that are offering services to football fans to one of the local football clubs. So probably, such a company would focus on some benefits for the fans.

Mark Stiving

Okay. So, I could I could create Mark’s Mobile System.

Magdalena Bay

Exactly. And then you could see Mark’s Mobile on the screen of your phone.

Mark Stiving

Yes. And so, in order for me to create Mark’s Mobile, I have to find customers, so you’re going to subscribe to Mark’s Mobile System. And then I have to find a provider, so I have to go to AT&T or Verizon and get them to let me use their networks so that you can make calls on their network.

Magdalena Bay

Yes, or you can use some companies like aggregators, enablers that are in between, and they can facilitate your integration, they can provide you with the kind of like ready to go system. Quicker solution, and just save some of your stress and efforts connected to talking to the MNO.

Mark Stiving

Perfect. Okay, I think I understand this now.

So, tell me about pricing. What’s the issue with pricing? What’s interesting about pricing in this industry?

Magdalena Bay

Well, I don’t know. Maybe everyone can say it about his industry, that pricing is tough. I believe that probably this is not an exception here. Pricing here is extremely difficult, in the sense that obviously, some of the customers wants to have everything the cheapest possible way. And in this setup, the infrastructure and building, everything cost your investment. You have to get your return on this investment. And as you mentioned before, MVNOs are always competing with these big boys, with MNOs, so this is almost impossible to be on the same pricing level.

Mark Stiving

And so, when we think about an MVNO pricing, are we thinking about their prices to the consumer?

Magdalena Bay

Yes. To the end users.

Mark Stiving

To the end users. And my feeling is, I trust AT&T, I trust Verizon. So, if I were ever going to use an MVNO, it would be because it was less expensive and I was price sensitive. Is that true or not true?

Magdalena Bay

No. That is true, because this is the trend on the market; that we have to educate our customers and explain to them why, what are the benefits of joining MVNO. But the thing is that the biggest core advantage here is that probably MVNO would have some additional services that the MNO cannot offer. So, it would rarely be on the pricing. It would rather be on something else.

Mark Stiving

Well, that’s the way I love business. I don’t like doing business as in let me compete on price. I’d much rather compete on value and things that we can do for customers.

Magdalena Bay

But this is difficult, right?

Mark Stiving

Yes. Absolutely. It’s not the easy thing.

You had mentioned football fans in an area. Can you think of some things that a MVNO could do that would add value?

Magdalena Bay

Yeah. For example, they could have a customized mobile app that would have a special loyalty program inside. So, every time you are going on a football match, then you are getting some points, and these points you can use for your mobile subscription. And every time you are using free gigabytes of the internet, then you’re getting 5% discount on the match.

Mark Stiving

So, it’s a way to essentially bundle the pricing of the cellular service with the pricing of going to football matches.

Magdalena Bay

It could be a strategy.

Mark Stiving

Yeah. That’s pretty interesting, because then you have to decide, does that fit? Who would do that? That’d be pretty interesting.

What are some other features that people might put in an MVNO to get me to pay more than Verizon? Verizon happens to be my provider. I pay Verizon.

Magdalena Bay

In general, the rule is that I’m telling to my customers, most optimal thing is when you have already at least one product running and then you add MVNO to this as the next one. The best situation would be, for example, if you are a local TV operator, and you already have maybe, in this older world, fixed line, and then you have a TV package. And now you are becoming MVNO, then you bundle it and you do like a triple or quadruple package. So, the biggest benefit here is that you, as the end user, are getting everything on one bill. You don’t have to deal with four companies, but you just get electronically the statement of your usage on one PDF.

Mark Stiving

Yeah. And so, do you understand how the pricing to the MVNO works?

Magdalena Bay

There could be different models, and this refers to both when we are talking about the pricing that we are getting way meaning in this case, I’m representing the enabler that is in between, but what I mean is that there would be a different pricing model that is coming from the MNO for the MVNO, and there can be different pricing models also to the end users. As you know, to the end users, you can have postpaid prepaid. Now, for example, in Poland, it is very often that you can have no limits, which is also kind of tricky.

Mark Stiving

Yeah, the unlimited piece.

Magdalena Bay

Yes.

Mark Stiving

How does that work, by the way? If you’re an MVNO, do you get an unlimited plan from your MNO?

Magdalena Bay

Yeah, this is what I mean that it can be different. Normally, you are offered two different models to choose, and they have everything – advantages and disadvantages. So, assuming that you would get also unlimited plans from the MNO, you are very limited on how much you can earn, because you are only limited to this, let’s say, two zloty per bundle or two euro per bundle – just any number I’m saying now – and you can’t grow on this, if you know what I mean.

Mark Stiving

I do. There’s only so much you can go.

So, this is pretty interesting. And so, as an MVNO, I’m going to pay an MNO based on which features I get?

Magdalena Bay

No. Features, it is likely that you would need to develop them on your side. For example, you want to have kind of like special throttle on data, may be slower the speed of the Internet, then most likely, you would do it on your side. It depends. It can sometimes also be offered by the MNO, but the game is mostly about the pricing.

So here starts the whole tricky part. Of course, the more volumes you have, the better. And in the beginning, it is pretty tough to be profitable here. So, we know, more or less, what is the breakeven point for the MVNO, how many end users needs to be there to have it. And I don’t know if this is natural in the other businesses, but here, we are playing on a breakage. Should I explain you how I’m seeing it?

Mark Stiving

Oh, please. Tell me what breakage means.

Magdalena Bay

Just to first to explain it on an example, let’s assume that I’m buying from the MNO. I’m buying minutes, SMS, and data, and paying for the real usage. While to my end users, I’m offering this in a kind of bigger packages. So, you’re getting 200 minutes, 100 SMS, and five gigabytes, and you are paying a certain price for this, and I’m assuming that you will use it. In some cases, you want to use it. Some customers will never use it. And some of them, they would be heavy users. So, they always put the statistics app. In the beginning, there are the psychological trends that when you buy your subscription, then you remember that you have it, you remember how much you paid, so you are using more. Then you forget about it, maybe you put it to the drawer and don’t use it at all, so over time, your usage is going down. And here, in this case, you have to sometimes even assume that for these heavy users, you lose some money, but then on average, you would be profitable.

Mark Stiving

So, in a lot of ways, it’s like an insurance company, where it’s okay that we lose money on a few people, as long as we’re making money on a lot of people.

Magdalena Bay

Yes, or on any kind of sports subscription, for example, that most of the users won’t go there so often and maybe don’t even use their subscription right.

Mark Stiving

Yeah. Absolutely.

Magdalena, what have I missed? This is such a new industry for me that I don’t know what I need to ask you.

Magdalena Bay

Well, actually, I would like to ask you some questions.

Mark Stiving

Feel free. Anytime.

Magdalena Bay

Well, I would love to know, how do you approach your consulting when you are coming to, like in this case, a totally new industry for you? What is the process? Is there any kind of discovery process where you are analyzing the pricing, the agreements? How does it work?

Mark Stiving

Constantly. I get into new industries all the time. In fact, I just had a call with an industry that I didn’t know anything at all about, and it was fun. And what we always do is look at who’s making what decisions.

So, if I were trying to coach your industry, your company on how to do pricing, what we would be doing is we’d be saying, “Okay, who’s buying from your company? Who’s buying the product?” And if I were to assume for a second that you are an MVNO, then I would say, “Okay, who is the customer? And how are we going to win that customer? And what is it that they value? What are the choices they would make?”

So, in my world, let’s assume that you own Beast Mobile; that’s my favorite MVNO now. So, you own Beast Mobile, you’re trying to figure out how to price for your customers. We would say, “Well, okay. If I didn’t buy from you, what would I buy? Would I buy Verizon or AT&T or something like that?”

Magdalena Bay

So, you do the benchmarking, right?

Mark Stiving

Yes, you have to do the benchmarking.

Magdalena Bay

Yeah.

Mark Stiving

But you also need to know what’s the value that I offer above and beyond what those guys offer, or what’s the value they offer above and beyond what I offer, so that I can price relative to that value.

Magdalena Bay

Yes, I understand.

Mark Stiving

And so, it’s always the decision.

Magdalena Bay

Well, US is a big, big market. So, in such case, would you try to get also some experience from the other countries or not? No, because I think US is so specific, right?

Mark Stiving

So, I think the opposite. I do not think the US is so specific. I think the US is so varied.

I think a ton about market segmentation and price segmentation. If you were to look across the US, and in fact, I’m sitting here looking at a list of MVNOs in the US and it looks like it’s got to be 200, 300 different MVNOs here. And it would make sense to me to say each one of these as targeting a different market segment. And what I would always recommend is can we define who that market segment is? Why do we have an advantage in that segment? What are the things they care about? And then specifically, how does that segment make decisions between my product and AT&T or Verizon or some other MVNO.

Magdalena Bay

Yes. And probably, you’re very right, because if you know that your MVNO is going to provide services to this niche, for example, let’s say fisherman, and fishermen that are fishing around the lake somewhere in Nevada, they have a very bad coverage on AT&T. But if for example, they could use another operator and add some maybe national roaming, and maybe this MVNO has some other services – now I’m putting a story, but maybe, somehow, they can strengthen the network, the signal, and so on and so on, then the fisherman would love to pay more.

Mark Stiving

Yeah, absolutely. If there’s a way to guarantee to a fisherman that there’s better service at the fishing spots, at the lakes, from other providers, absolutely, that’s a huge value add. And now, we’ve chosen a market segment.

Now what I would be doing, as far as what I care about other countries, I care about what I could learn from other countries. I would want to know what was successful in different places, and try to get ideas from them to know what could I do in my country. How would I be able to do something different? Or which market segment would I choose? But I would think that I would probably wouldn’t just say, “Hey, we’re going to be like France,” “Hey, we’re going to be like Poland.” I would say, “What’s similar and what could I borrow from them?” That makes sense?

Magdalena Bay

Yeah, that’s right. How about taking the experience from other industries?

Mark Stiving

Definitely, if I could think of an industry that makes sense like this. I haven’t studied the industry, but I know that in some states, I could buy electricity from more than one company, but there’s only one set of lines that come to my house, which means the one company is providing all the infrastructure, but there’s other people selling me the electrons, which is probably relatively similar to this industry, and maybe there are ways to learn from that industry to say, “Okay, now how would I do that in terms of reselling the service, or reselling this feature?” But if I could think of industries that were the same, I would try to.

Magdalena Bay

I understand.

Well, probably there are much more aspects I could think of, maybe in telecommunication, this is not that happening, not that often that you would also extend the package for more months, because normally, the validity of the package is only 30 days or one month.

Mark Stiving

Yeah. And so, to be fair, I think we can learn pricing lessons from every industry. Essentially, Beast Mobile is trying to sell me a subscription. Even if I only have to sign up for one month at a time, they want me to buy next month, the next month, the next month. So, anybody selling subscriptions, what can I learn from the subscription industry? Or if I’m going to raise prices, and I’m Beast Mobile, I can learn about how to raise prices by watching how other companies raise prices, and what works and what doesn’t work, and how to communicate that to my customers.

So, there are things we can learn from everywhere, which I think, how I do pricing is I’m always watching things that people do and trying to understand why it worked that way. Why did somebody do that? How did the people respond? Who were making the decisions using those prices? So, there’s all of them.

Magdalena Bay

All of them. Yeah, that’s very interesting.

Mark Stiving

Nice.

Magdalena. I have so enjoyed talking to you, but I’m going to ask you the hard question. I’m going to ask you the last question no matter what.

Magdalena Bay

Please go ahead.

Mark Stiving

What’s the one piece of pricing advice you would give our listeners that you think could have a big impact on their business?

Magdalena Bay

I would say that you need to give time to your customers so they can adjust to the new models you are trying to introduce. And maybe, sometimes, the strategy that you’re implementing won’t work in the beginning, but if you just wait little by little, then it can bring the results.

Mark Stiving

Nice. And so, I’m going to interpret that based on these MVNOs that we’ve been talking about for this whole conversation. And that is an MVNO comes out and they say, “Hey, let me go try this new strategy. Let me go try targeting fishermen or let me go try targeting this special area.” And we need to give it a little bit of time to say “Does this really work or not?”

Magdalena Bay

Yes. Exactly. Everything takes time.

Mark Stiving

It’s so funny. I’m glad you brought that up, because often, when I deal with people who are releasing new products or something like that, they think, “Oh my gosh, it’s not selling the way I want it to. I need to lower the price.” And in truth, that’s probably not the problem. The problem is usually, they aren’t communicating the value to the right market segment yet.

Magdalena Bay

Yeah, this is what I wanted to say.

Mark Stiving

Yeah. If they would refocus their communication, their marketing, and their sales, then they probably could win at the prices they think they should be winning at.

Magdalena Bay

Yes. And if they take such a decision, there is no way back.

Mark Stiving

Yeah.

Magdalena, this has been fun. Thank you so much. I appreciate your time today.

If anybody wants to contact you, how can they do that?

Magdalena Bay

Basically, they can contact me over LinkedIn.

Mark Stiving

We’ll have your LinkedIn URL in the show notes. That’ll be pretty easy for everybody to find.

Episode 176 is all done. Thank you so much for listening.

If you enjoyed this, would you please leave us a rating and a review and please tell your pricing colleagues about this podcast?

I was at PPS a month or so ago, and I was just shocked that there were people in pricing who haven’t heard of our podcast yet. How frustrating could that be?

So, if you know anybody in pricing that could listen, would you please share?

And finally, if you have any questions or concerns about the podcast or pricing in general, feel free to email me: mark@impactpricing.com.

Now, go make an impact.

Mark Stiving

Thanks again to Jennings Executive Search for sponsoring our podcast.

If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people. Contact Jennings Executive Search.

Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

Related Podcasts