Background
Having reached saturation, the Belgian mobile market with 9.48million subscribers has become highly competitive as network operators continue to compete for market share. With 2.6 million subscribers and 22 per cent of the market, BASE, now the third largest mobile operator in Belgium, has successfully adapted to the role of 'smart follower' attracting over 477,000 new subscribers in the last year alone. Aggressive marketing plus innovative tariffs and bundles have been the hallmark of this success and have led to BASE becoming the fastest growing operator within Belgium for the last 4 years. BASE is a 100% owned subsidiary of KPN the leading network provider in the Netherlands.
The Challenge
In mid 2006 BASE decided to investigate offering an MMS service to its customers. Aggressive marketing and attractive service bundles have enabled BASE to increase both its market share and traffic through the network and the time seemed opportune to introduce an MMS service and build on this success.
After launching several years ago MMS is now growing in popularity in Western Europe since all networks are now fully interoperable and colour-screen camera handsets are widely available. At the same time MMS tariffs have become more affordable and transparent.
To offer MMS services, network operators are required to install significant additional infrastructure, requiring considerable up front investment and time. To address these issues, BASE started to look for a hosted service solution to enable it to introduce MMS services to its customers.
The first challenge was to find a supplier and then to bring the MMS service to market within three months.
The Strategy
BASE has adapted itself in order to become a 'smart follower' in the Belgian market, outsourcing all of its traditional network operator tasks through managed services or outsourcing contracts. This decision was taken so that BASE could create a very thin operations organisation, allowing their marketing team to then focus entirely on its existing customers and attracting new ones. As a result BASE is competing successfully in the saturated Belgian mobile market offering tariffs and services that are equal to or better than its competitors. By focussing on the youth sector and more especially the prepaid market it has been able to adopt a very aggressive marketing stance in order to tempt subscribers away from their competitors.
Tier one mobile operators in Belgium have had an MMS services offering since 2002, so BASE had to consider its decision to offer its own MMS services carefully. Even in 2006 with established and proven technology MMS remained a substantial investment, so BASE started to think about a hosted service, which could simply interconnect with their network.
A hosted service solution provides an alternative business model, whereby capital expenditure, speed to market and return on investment considerations can be replaced by much more tangible business arguments. Hosted services fall in line with BASE's outsourcing strategy and for MMS offered a good way of testing the concept without posing a risk to existing revenue generating traffic.
By launching MMS as a hosted service BASE could carry on with their smart follower strategy allowing them to continue to differentiate themselves from their competitors. It also gave them the flexibility to provide their customers with innovative offers that will contribute to them increasing their take up of the new MMS services.
Finding a Partner
BASE started looking for a hosted MMS solution partner that could meet the ambitious target for the launch of the service. Acision who had supplied BASE with an SMSC and mobile internet capabilities was already considered to be trusted supplier. Acision also had the necessary expertise with 50 successful MMS solutions worldwide and in particular to other KPN Group companies including KPN in the Netherlands and E-Plus in Germany. By the time BASE confirmed Acision as its partner for its MMS service and contracts had been signed, only three months were left for deployment.
Acision's hosted MMS service provided BASE with low initial up front costs and per message payment, and they were able to introduce its MMS service quickly. It would be backed by an aggressive marketing campaign to launch the service by introducing parity pricing between MMS and SMS. This represented a low risk strategy and one that BASE could benefit from very quickly.
"We chose Acision because they were already a trusted supplier and because they were able to introduce the service in the ambitious timeframe that we had specified. We were also able to agree per message pricing against forecasts which would effectively mean shared risks and shared success," said Vincent Colinet BASE's MMS project manager.
The Solution
Acision set up a new MMSC in their state-of-the-art data centre in Nieuwegein, in the Netherlands. Acision's MMS product is an extensively deployed and trusted solution and the MMS hosted service provided the flexibility that BASE was looking for as the platform can easily scale to serve many customers and cope with the growth experienced by these customers. More processing capacity can be added in line with demand simply by adding new hardware.
The basic service was up and running within weeks with the first successful test MMS being sent over the BASE network within the first month. Integration with billing and the BASE network was complete after 2.5 months with the system going live within 12 weeks. Since that time traffic has been broadly in line with forecasts.
Vincent Colinet BASE's MMS Project Manager commenting on Acision's selection said: "We were very happy with the way this project ran to time and budget. We were able to deliver as and when we promised the marketing team so that the service could go live to customers at exactly the right time. The professionalism and expertise demonstrated by Acision on this project more than justified our choice of partner. BASE traffic forecasts have been accurate and the quality and speed of the service has been excellent."
Sharing Risk
Hosted services are essentially about sharing risk. For the hosted MMS service, Acision bears the cost of the MMSC and charges BASE an initial set up charge and fees for professional services related to integration. Thereafter BASE buys a quantity of MMS messages upfront based on agreed forecast volumes. BASE has been able to launch its MMS service in the market quickly and with minimal cost.
Every quarter Acision reports on the volume of MMS traffic to see if it is above or below forecast. If MMS traffic goes beyond the size of BASE's prepaid bundle, they simply purchase a greater volume against a defined price. If MMS traffic is below forecast, the remaining portion of the bundle moves into the next quarter. The flexibility of this arrangement was important to BASE as it allowed them to market its MMS service in an aggressive and innovative way and in line with its general strategic approach. Loyal BASE customers would expect nothing less.
By being able to negotiate a good per message price with little or no upfront costs BASE has not been faced with the normal concerns of getting a quick return on its investment. This has allowed them to enter the MMS market with a very aggressive marketing strategy, by offering MMS at the same price as SMS within the different tariff bands. As a result BASE forecasts are being successfully met.
Conclusion
The hosted services model is becoming rapidly accepted as telecom service providers search for alternatives to offset the costs of maintaining networks and legacy systems. This model of service on demand means that the complexities, costs and management of software are the responsibility of the hosted services provider. Issues such as upgrading or scaling are eliminated as the hosted services provider takes on the role of maintaining an up-to-date service at guaranteed service levels.
Telecoms and cable operators can now get a fully featured service solution up and running without the normal up front costs associated with on site installations or having to deal with keeping them up to date over time.
For BASE this option proved attractive allowing it to begin to compete head on with its competitors by introducing a best in class solution in record time.