Building Your MVNO: MNO cost base The cost structure of an MNO is biased heavily towards fixed costs. The main fixed cost elements of the MNO are: - Network operations and maintenance (typically 30% of all fixed costs) - Sales (20%) - Customer service and billing (15%) - Marketing and communications (10-15%) The main variable cost elements for the MNO are: - Interconnect costs - Customer acquisition - Customer retention costs MVNO cost base: The cost structure of the typical MVNO is almost completely the opposite of a facilities based network operator. The main fixed cost elements are relatively small and comprise: - Customer care and billing - Sales, marketing and communications The variable cost proportions are dominated by wholesale airtime costs as well as customer acquisition. Wholesale costs can often represent 60% to 70% of a typical MVNO’s operating costs which immediately limits profit margins. It is therefore essential for the MVNO to develop a business model that minimises the cost of customer acquisition and retention as well as fixed costs in order for the business model to be commercially viable. Successful MVNOs are often those that can leverage existing distribution assets and channels to reduce these costs.
Posted on: Sat, 17 Aug 2013 20:19:06 +0000
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