Blyk's journey from MVNO to network service

UPDATE2: It now turns out that the previous story may have been more late than wrong, at least so says NMA and telecoms.com. This is also obliquely supported by Jonathan MacDonald's latest blog on the subject!
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UPDATE: Looks like New Media Age might have got it a bit wrong in their article that kicked all this off! According to Mobile Marketing magazine the original story is a lot of tosh. This is backed by a blog post by Jonathan MacDonald on the subject. Perhaps, following along some of the lines of thought below, it is what they should be doing though?
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Was interested to read this morning that Blyk had taken the second step in what has become their transition from an MVNO to a network service provider. When they announced their last round of investment part of the story was a new "partnering strategy" - one aspect of which was direct partnering with MNOs.

They have now taken the next step down this road and announced that they will no longer operate as a consumer facing MVNO, and will rely entirely on partnership arrangements with operators to get to the consumer.

From an extreme helicopter level view the overall pattern of relationships remains the same. The MNO provides access to the consumers to Blyk who then partners with brands to engage those consumers. The brand pays for this engagement and the consumer is rewarded by call credits etc.

That said there are obviously a large number of practical differences between the two shapes:

• Blyk end up with a massively reduced operational overhead - being a small MVNO is not cheap - as many have found to their cost before.
  
• the users now "belong" to the operator, not to Blyk. This shifts the balance of power, but also makes the partnering concept a more appealing one to the operators since it increases their number of subscribers, and for subscribers in Blyk's current demographic likely increases ARPU.
• Blyk are now much more dependent on the operator for effective communication with the customers - but then conversely the operator is now more of a partner than simply a paid conduit.
• Blyk can now offer their service to any operator who is willing to take it worldwide - much more flexible.
  

Looking at all of this retrospectively (or using "post rationalisation" as Russell put it ;-) using an initial MVNO phase to prove the model works - and with 25% response rates to show to brands and healthy ARPUs to show to operators they have certainly done that - might have always been the plan.

One small fly in the ointment is that now Blyk have spent a large amount of their investors money proving their model works, other players might start muscling in and taking market share from them. It is early days yet but Russell Buckley recently blogged about a Croatian company Out There Media which had launched a comparable service called Tomato Plus with some success.

On one hand you might ask if giving up the MVNO angle has reduced Blyk's differentiation and thus made them more vulnerable to smaller newcomers, but on the other perhaps it was never a sustainable mode of operation but it has given them first mover advantage (which they must now maintain) and an established brand identity. Only time will tell!

PS. Very pleased to have got a mention in the latest Carnival which is up over at VoIP Survivor.

3's brave new world!

3 in the UK are heavily promoting that they are changing mobile forever by offering unlimited free calls. At a slightly closer glance this is all based around their relationship with Skype - and what they are really saying is that people on a 3 contract or on PAYG for 90 days after activating a top-up, will be able to make unlimited free Skype calls to other skype users and landlines and mobiles abroad.

There are some small flies in the ointment however:

• you need a handset that can run the three Skype client. My E61i I use on 3 isn't supported which is a pity, especially snce other equivalent handsets are. All the current handsets being sold are compatible which is good.
  
• you must use the special 3 skype client. If you use some other skype clinet (e.g. Fring) you will rack up significant data traffic which could end up costing you a lot. Can't help feeling that this is going to be confusing for the normob and will lead to a Daily Mail headline or two. Usual mobile industry problem of lack of simple predictability of cost.
  
• According to the support site "3 doesn’t support Skype video calling (known as SkypeIn), Skype SMS (texting) or Skype voicemail" (sic) so if you use anything beyond the basics of Skype you are out of luck.
• SkypeOut only works outside the UK - if you want to make calls to UK numbers you have to use a conventional mobile voice call.
  

While it would be easy to throw our hands up in horror at some of these restrictions they do make some sense in terms of making it possible for 3 to do it at all - and provide a usefully different view on mobile service provision in the process. Distinctly disruptive!

At a more strategic level this is one one hand fairly brave and on the other playing to their strengths. The obvious risk of any operator doing this sort of thing is that they canibalise their voice revenues, but given 3's demographic are not likely to be massively voice-centric this is far less of a risk for them than it would be for the likes of Vodafone - who are thus unlikely to feel able to follow giving 3 a useful point of differentiation.

Three have been doing this for a while now - since the X series came out - but they seem to be now pushing it as the defining difference of being with 3. Will be interesting to see how the other operators respond!

PS. This week's carnival is up over at mobilestance.

Vodafone and the "Mobile Internet"

Wednesday seemed like a normal day at first - then we started getting the first reports of content not being correctly delivered to Vodafone contract customers and so the fun began!

I should say from the start that I actually think that what Vodafone are trying to do, provide sensible access to the "real" internet across the majority of phones, is a very laudable thing. Unfortunately it is also very hard to do right - as they have discovered.

The basic principle of their system is to pass all web traffic from phones on their network through a number of transcoders which both try to reduce the size of any images etc in the pages, and make the layout easier to browse on a standard xhtml handset.

They key problem is deciding when to do this. They are taking the approach that since the majority of named sites are non-mobile they will assume that any site they don't specifically know to be mobile should be run through their transcoders.

Initially all hits to our sites were coming through

They do allow users to choose whether or not they see a transcoded or raw view - but this is expressed along the lines of an "optimised for mobile" view vs a "PC" view - the vast majority of users will plump for the first without understanding the implications.

As I said at the start I do see the reasoning behind their overall direction - now the "but"s!

Key things they have done badly wrong at a practical level are to roll out a system with this fundamental an impact ...

• without warning anybody in advance
• without full testing - since if they had tested it many of these issues would have been obvious

Rather poor for an organisation as substantial as Vodafone. At the time of writting if a Vodafone customer were to purchase a media product and download it to their handset they would not get the media they had paid for - Vodafone takes the real media and delivers something inferior in its place. Not a great way to increase user confidence.

Looking at the wider view it is at best questionable for Vodafone to unilaterally set aside the usual standards and conventions to impose their view of what people should see when viewing the web through the Vodafone network.

That said the whole area of the mobile web is necessarily a process of compromise.

Geoff.

What is a Mobile Operator anyway?

Last night I went along to Mobile Monday in London for the first time - an interesting and well organised event hosted in Google's offices at Victoria.

Amongst the many interesting things discussed, and which I will probably return to in future posts, Ajit Jaokar made a specific prediction that the role of the mobile operator will in time become primarily one of data transmission - "the pipe".

This is in marked contrast to what I heard from Orange, who at their partner camp expressed the view that they would "never be just the pipe, there isn't sufficient value there", and that instead they would focus on being aggregators of services.

This fundamental tension between the operators and the service and content providers isn't new, though now some sufficiently large and well resourced organisations are joining the latter group to make the outcome less of a foregone conclusion.

Also, with the operators no longer simply providing connectivity to mobile devices, but spreading out into wired Internet and digital TV etc, their fundamental strength of control of the cell sites could potentially become diluted.

Will be interesting to see how this one plays out ....

Free mobile calls/txts if you are young enough!

In an interesting disruptive development in the operator space Blyk have announced they will be rolling out a purely ad funded MVNO across Europe - starting in the UK mid-2007.

While the concept of using advertising to cover the costs of mobile services is now generally accepted, and has neat parallels with commercial television, this is by far the most adventurous step in that direction I have come across.

The idea is that their subscribers (16-24 year olds only) all sign up to receive some degree of advertising, giving that magic 100% opt-in to keep the marketeers happy.

It will be very interesting to see the details as it rolls out, and to see how the traditional telcos react! Especially those for whom that age range is core.

Orange - mobile operator or something else?

Much of last weeks Orange partner camp was taken up with them telling their partner community about how they were now (or at least in the medium term) in the business of competing with the likes of Google, Yahoo!, and MSN.

At points the buzzwords were flowing thick and fast - "convergence", "web 2.0", "user generated content", etc. Some concrete progress to with the impending launch of their Pikeo location aware photo site. Also plenty of nice ideas somewhat further out for 3rd party mashups able to include various mobile network enablers such as billing, location and presence.

Given all of this I was quite surprised to read that in a slightly bizarre twist Orange have today announced they are closing down their one established bit of web community real estate - smartgroups.

So the question is what do Orange really want to be - a mobile telco or an Internet company which uses its control of various access routes (ISP, digital TV, mobile) to bring users to its various sites and services.

Orange Partner Camp

Just outside sunny Cadiz finding out about the world according to Orange. It is pouring down outside!

The opening "pow wow" was very Hollywood and gung ho stuff for the Orange faithfull. Interesting snippets were on ...

• the Orange "next" programme which covers convergence both in terms of telecoms and broadband (the unik fixed/mobile thingy) and also in terms of services with a view to social networking and user generated content. The "web 2.0" buzzword was rather overused.

• Their content people seem very focussed on apps on one hand and mobile TV on the other. Looks like in their eyes simpler content is yesterday's news. A very aggressive target of $400m of mobile content sales across the group for 2008 was mentioned.

• The Access (PalmSource as was) linux based software platform was being pushed very hard as the new third way in "container" devices - but then again they had stumped up to be platinum sponser!
  

Overall feels a very successful event - all 450 places allegedly taken and feels that way. Plenty of interesting folks to talk to! But more on that next time ...