FC Porto & TMN: A new MVNO is born!

Here's something nice: after I mused extensively about the sense and nonsense of MVNO models. I have long been preaching that the true reason (other than price) why people might move would be driven by affinity marketing, namely the strong affiliation to a brand, a cause, an organization conveying something in people's lifestyle that they wish to publicly own up to. So what is one of the strongest affinities people have? Their partner? No, 50% of marriages end in divorce. Their car? No, it breaks down after a while. Their phone? No, they change it every 12-18 months. Their club? YES! Or have you ever heard of a Boston Celtics fan who converted to the Knicks, a 49ers man crossing over to the Raiders? You will not because they do not exist.

Enter the good folks of Portuguese carrier TMN and FC Porto, one of the country's major football (my American friends, read: soccer) clubs. Rather than fussing about sourcing handsets, staffing customer service and equipping shops in AAA locations, they focus on the real thing, namely the brand. The brief PR release outlines the service roughly: "The Dragao Mobile service offers calls to all networks at EUR 0.16 per minute and SMS at EUR 0.08 each, as well as personalised services for club members and fans. The club's name will be shown on the handset display, and users will benefit from exclusive content. Customers will also get 5 percent of the value of each top-up returned to their bank account for use on FC Porto products and services. The package includes a EUR 10 card and a Motorola W218 mobile phone for EUR 59.90."

There you have it. This is as it should be, in a previous post I called this "soft customization": they utilise and activate the brand values by personalizing the handset and giving users some goodies connected to the brand. For the remainder, existing channels, networks, shops, handsets are being used, making the whole thing a whole lot cheaper. For a network operator, this makes sense as it reduces churn (listen & repeat: "no one ever changes the allegiance to their club!"), i.e. fans will be significantly more likely to stay with a network if it is the one where they have the chance to show their allegiance.

I sincerely hope that this will be successful. I would otherwise have to bury my conviction that affinity marketing is one of the instruments of choice in this industry, and that would be a real shame! ;-)

Amp'd files for Chapter 11 - Revisiting MVNO's

One down... Amp'd files for Chapter 11, citing the need for more time to ramp up its systems for demand. I wonder: shouldn't $360m in VC monies be enough to build systems that can cater for 200,000 customers? Given that Verizon provides the network and Motorola the handsets, that would mean that they took $1,800 per customer on all the rest; a bit stiff. Verizon is the biggest creditor with some $33m in receivables. So their wonderful ARPU wasn't that great after all, huh?

It's a bit of a bleak outlook, and whilst the offloading of debt might work this time, it puts some serious question marks behind the model of MVNO Amp'd tried to implement, namely one that tries to build a full infrastructure other than the actual base stations. Now, the question is old: is this really necessary? It has failed often: they are not the first to stop. ESPN did it. Has anyone ever heard of Extreme Mobile again? To remind you: they had announced a Vodafone-powered MVNO in the UK... and the site still says "coming soon".

Might perhaps be the call for a network provider that possesses some smart backend infrastructure allowing printing of customised invoices, sending of customised messages and provision of customised content be the way out? It would arguably be dramatically cheaper to have a network that rides on the back of a) a brand, b) retail distribution through the likes of Carphone Warehouse, BestBuy, MediaMarkt, FNAC, El Corte Ingles (depending on where you live) and c) "soft" customisation (i.e. through packaging rather than retail channel, etc).

What would be in it for the Vodafones and Verizons of this world? Lower churn! It is hard to get to real numbers but lore has it that the cost of one Mannesmann D2 customer when Vodafone bought them was a whopping $7,800 and that with - allegedly - 30% or so churn p.a. Surely no customer can use their phones enough to make that money back, me thinks... If churn could be reduced by, say, half if customers would stick with the brand due to higher loyalty, then the supporting carriers would make a killing! Customers are way more loyal to the football club they support, their politicial party of choice, the National Trust, U2, their Almer Mater, their home town - you call it affinity marketing, a concept that has been a great success for years e.g. for credit cards. Wouldn't a combination of this make a lot of sense? The thing that killed the market so far is greed: everyone wanted to own the customer front to end - when all the customer really wanted was good service, etc and this fuzzy warm feeling.

Get onto it. I believe it would work. Anyone here to try?