Could we see service-focused 5G operator sub-brands?
Global operators have experienced unprecedented change over the last five years or so. Historically, the days of customer acquisition and retention were relatively easy. Mobile subscribers used their devices for voice and data, and most selected their operator based on simple factors – price, availability of network coverage where they lived, and the choice of device available to them.
In the early days, operators could be all things to all people and build brand values that resonated with all (by reflecting only mild differentiation). How times have changed, says Jonathan Plant, marketing director, Openet.
While the number of spectrum-holding operators has stayed relatively constant in most global markets (though this is starting to change), the choice of service provider available to global consumers has increased exponentially. Diversification began with the introduction of mobile virtual network operators (MVNOs) and has spread further with most major mobile operators launching their own sub-brands to offer fresh excitement to certain demographics or market segments.
The launch of sub-brands began two or three years ago and has become an acknowledged and successful means for major operators to grow top line revenues. Their success lies in their ability to create an entirely new identity which appeals directly to the market segment they are targeting. These segments can include the price sensitive, the young, business users, specific ethnic groups etc. Sub-brand are global and there are good examples of successful digital first sub-brands in all regions. In the UK, Vodafone launched its Voxi sub-brand to appeal to subscribers aged 25 and under.
In Canada, Videotron has its sub-brand Fizz which is a digital-only service focusing on perks such as usage rollovers and rewards for users in Quebec and Ottawa. The operator in Indonesia, Telkomsel, launched a digital first sub brand called by.U which targets the 44 million digital-native Gen Z subscribers (15 to 24 years old) in Indonesia with digital prepaid cellular service. These new identities were supported by flexible business support systems (BSS) creating the relevant policies and market offers.
Sub-brands have certainly helped most major operators gain market share. They have been launched and become popular in many countries including France, Germany, the Netherlands, the U.S. and Malaysia. While these sub-brands account for a relatively low numbers of subscribers compared to their major operator owners, their numbers are expected to grow aggressively in the next 3 to 5 years.
5G operator sub-brands: from segment to service?
The arrival of 5G holds exciting possibilities when it comes to operator diversification through sub-brands that stretch far beyond what is possible today. The opportunity will come from the ability to charge a premium from guaranteed service quality for specific services. Network slicing will offer these guarantees and enable operators to target new customers according to service usage and preference, as opposed to the customer segments used today.
Indeed, the ability to virtually slice a network to dedicate bandwidth to a specific service is central to operators offering ultra-low latency services. These services could include the use of 5G networks for broadcasting, or for an ultra-reliable and secure network to power autonomous cars, or perhaps a dedicated cloud gaming service. Many global operators are looking closely at cloud gaming as a lucrative potential revenue generator in the short to medium term.
If an operator was to accelerate investment to achieve a fully standalone 5G network, complete with 5G transport and a fully dynamic and agile virtual BSS, it would have the ability to offer dedicated cloud gaming services to active gamers. It is therefore possible, and indeed likely, that operators would want to capitalise on this early mover advantage, partner with games publishers and create a sub-brand that directly appeals to gamers.
Major operators with subsidiaries in multiple countries could make this branded gaming service available in any territory it chooses, to underline its position as the global gaming connectivity provider of choice. The operator in question could create different price plans according to weight of usage and raise ARPU considerably.
Fulfilling the promise
Global operators have launched sub-brands to make them appeal to more existing and potential customers and grow top line revenue. The generation of additional income is critical given the significant investments made in 5G networks. The launch of 5G and potential creation of service-oriented sub-brands will enable operators to further differentiate from the competition by acquiring new customers according to their service preferences. High value 5G services, like cloud gaming, will enable operators to charge a premium, on the basis that they deliver the service experience their customers expect, resulting in higher ARPU and greater overall satisfaction.
Creating and monetising sub-brands, either today or for 5G in the future requires agile, scalable and open BSS that can adapt to changing market conditions. In the case of a cloud gaming sub-brand, operators will require capabilities such as ultra-low latency charging to support gaming-driven slices. The technology exists to fulfill this promise and the success of sub-brands today, and their anticipated growth in the future should give operators all the confidence they need to expand their thinking.
The author is Jonathan Plant, marketing director, Openet.