Rate plan optimisation – the MVNOs’ ‘inexhaustible’ source of savings
If you are a mobile virtual network operator (MVNO) or Internet of Things (IoT) connectivity service provider, you should be aware that you can increase your margin by at least 10%.
There’s an inexhaustible source of saving, said Liran Kessel, CEO of EyesOnT, in the pricing and business model gap between the connectivity prices you get from your mobile network operator (MNO) partners and those you offer your end clients. With the tough competition in the IoT/M2M (machine-to-machine communications) market, low ARPU (average revenue per user) and immense growth of connected devices, there’s a lot of money out there. This article focuses on this ‘inexhaustible’ source of saving and what mechanism should be in place to monetise this source.
Rate plan optimisation – How?
One of the main factors that influence the MVNO’s profitability is obviously the margin between the ‘wholesale price’ from the MNO and the ‘retail price’ offered to end-clients. As MVNOs get bigger economic scale, they might be able to re-negotiate their contracts and rate plans with MNOs, however there is another way to increase their margins without a need for negotiation.
MNOs offer MVNOs a variety of bundle and pooled bundle rate plans (e.g. 2MB, 5MB, etc.). Although the initial allocation of SIMs into the various bundles is performed arbitrarily, or based on expected usages, most MNOs allow re-allocation of SIMs into different rate plans before the end of the monthly billing cycle.
In essence, the MVNO can move SIMs from one plan to another based on the actual usage. So for example, if a SIM in a small plan (e.g. 2MB) ends up consuming more, they can move it to a larger plan in order to avoid costly over-usage costs. The same logic works vice versa, if a SIM on a larger plan (e.g. 5MB) consumes less data, they can move it to a smaller and cheaper plan (e.g. 2MB) to save the extra cost.
This becomes more complex when pooled bundles are in play, as the MVNO then needs to balance the usages of different SIMs to fit into the available pools, aiming to always balance and minimise the over usage as well as the under usage of the overall pool size.
One can handle, up to a point manually doing this SIMs reallocation, however as the size of the deployment grows, the variety of usages grow and the amount and types of rate plans grow, it becomes unrealistic, time-consuming, and uneconomic when dealing with thousands and hundreds of thousands of SIMs.
Therefore, MVNOs and service providers must apply an automatic mechanism that can analyse usage patterns, predicts the actual usage for the entire month and suggests and/or apply automatic re-allocation of SIMs into the most cost-effective rate plan tier, while integrating with the operators’ connectivity platforms to perform the re-allocation.
EyesOnT is the only solution in the market that offers this type of functionality. EyesOnT’s optimisation algorithms support a variety of IoT/M2M optimisation scenarios that increases MVNOs margin and reduces connectivity costs such as rate plan optimisation (bundle rate plans and pooled bundle plans),roaming optimisation, early detection and prevention of abnormal data usages patterns and trends and more.
The author of this blog is Liran Kessel, co-founder and CEO of EyesOnT.
About the Author:
Liran is driven by intelligently helping companies to keep their eyes on IoT connectivity through IoT Connectivity Cost and Saving management. Liran takes advantage of his work exploring new business opportunities, to identify and help drive EyesOnT towards developing new cutting edge technologically capabilities and innovation as a business enabler for companies.
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