Reality Check: Getting into mobile services? The argument for buy vs. build


Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.

In the United States and many other countries, more than half of the population now has a smartphone. And regardless of whether they own a smartphone or a feature phone, most people use text messaging and other data services on a regular basis. Those trends and habits create opportunities for retailers, cable operators, broadband providers and other companies to drive additional revenue and establish customer relationships that foster long-term loyalty.

The catch is that these new entrants typically have little or no mobile infrastructure and expertise. So to capitalize on those opportunities, they must decide whether to hire that staff and buy the necessary infrastructure, or outsource those tasks. This build-versus-buy choice is a major one when the goal is to go beyond simply offering an app and instead provide a suite of mobile services as a mobile virtual network operator.

The build-or-buy decision depends on factors such as BSS/OSS integration into their back-end systems, wireless provisioning into the various carriers’ systems and corresponding capital investments. They must also consider which technical support systems they will need to be successful and whether they should engage a mobile virtual network enabler to assist them. They should also account for in-store, online and mobile systems support. Layer on top of all this the need to support a wide range of mobile devices and device types along with third-party services, and the whole proposition quickly becomes highly complex.

An historical example of a successful buy-versus-build decision is Virgin Mobile USA, which offers its Beyond Talk, Broadband2Go and PayLo services as different brands to reach different market segments. Before Sprint Nextel acquired it, Virgin Mobile USA successfully chose a build strategy and launched and expanded its service offerings by building many of its BSS/OSS systems at a cost in the millions of dollars. The company engaged multiple vendors for best-of-breed logistics, billing, etc., as it scaled its infrastructure. In contrast, there were several companies that spent millions of dollars building a wireless infrastructure without achieving success, including Disney, ESPN and Amp’d Mobile.

For many companies, the safer and easier solution is to buy. Buying also represents challenges. The company may have to select and coordinate multiple mobile vendors to cobble together a comprehensive solution capable of meeting its business goals: one vendor to handle fulfillment, another for logistics, another for mobile storefront, another for provisioning, another for billing, and so on. Another challenge is finding vendors that can support a “pay-as-you-grow” model that enables the company to scale its mobile offerings as its businesses grows without a large upfront investment.

The company is interested in leveraging its brand to develop new revenue streams and customer traction, not in developing wireless OSS integration expertise. Dealing with a multi-faceted integration of mobile systems adds complexity that delays time to market and time to revenue versus focusing on what the company does best: promoting and selling its products and services.

Why turnkey solutions are key

To accelerate their go-to-market capabilities, these companies need a one-stop-shop, turnkey solution that can be delivered via a software-as-a-service or managed service model to provide all of the required applications to seamlessly deploy mobile services.
In this case, what does the ideal turnkey solution look like? It would be a hosted service that provides the following baseline capabilities: BSS/OSS integration into back-end systems, wireless provisioning into the carriers’ systems, seamless customer service enrollment (e.g., sign up and begin using a service), device fulfillment, real-time rating and charging to avoid revenue leakage, device GUIs, portal services, payment services and billing, reporting and analytics.

Turnkey solutions must enable the configuration of services to fit a company’s specific business model, thereby requiring a strong element of flexibility. For example, many retailers want to incentivize their customers to purchase additional services and will use mobile as a means to reward them. Through loyalty programs, retailers often reward customers who purchase products and services with mobile offerings, such as free minutes, games or app downloads as well as other retailer incentives.

Flexibility of this kind is also critical for companies that want to trial a mobile service offering before committing a lot of resources to it or buying a lot of mobile devices, which can be expensive. Here, a turnkey solution can allow a company to test the waters and then proceed down a migration path toward greater investment in supporting a larger mobile-services rollout if its business model makes sense.

In conclusion, there are only a finite number of technology providers that understand BSS/OSS integration and back-end systems, along with building user friendly GUIs and customer facing solutions. In evaluating “buy partners” for their mobile device and services support, companies should seek out a vendor that offers a turnkey SaaS or managed service solution that integrates with their own systems, as well as those of the wholesale carrier and scales with their business as it grows. Those that do are well positioned to use mobile to drive new revenue and foster long-term customer relationships.

Ellen Schwab possesses more than 20 years experience in business development, sales and marketing for telecommunications and data communications infrastructure companies. Schwab has successfully guided a range of public and private, large and small companies toward high-impact growth and profitability. As CEO of Telespree Communications, Schwab leads Telespree’s advancement in data enablement and self service solutions for the wireless industry as well as oversees all aspects of corporate strategy.

About Author

Dan Meyer

Editor-in-Chief, Telecom Software, Policy, Wireless Carriers
Dan Meyer started at RCR Wireless News in 1999 covering wireless carriers and wireless technologies. As editor-in-chief, Dan oversees editorial direction, reports on news from the wireless industry, including telecom software, policy and wireless carriers, and provides opinion stories on topics of concern to the market such as his popular Friday column “Worst of the Week.”