Making your brand talk

When Virgin launched its mobile service in 2000, it was expected that many other big brands would follow suit. Virtual network operators are still thin on the ground in the UK, but recent activity suggests the labelled telecoms market is about to take off, says Jonathan Harwood

As Disney prepares to enter the mobile phone market in the US, and three former Orange marketers launch a service exclusively for students in the UK (MW last week) it seems as though branded communications packages are finally catching on.

Five years ago, when Virgin launched its mobile service, it was thought that many other names would follow suit and become mobile virtual network operators (MVNOs).

On paper it seems like a marketer’s dream – a brand simply buys airtime from an existing network that owns the “bricks and mortar” of the service and sells it on to customers under its own name.

No competition

Virgin, which piggybacks on T-Mobile’s network, accounts for seven per cent of the mobile market in the UK. However, despite the bold predictions and Virgin’s relative success, serious competitors have remained thin on the ground.

Although half of the UK’s mobile users are on pre-pay packages – classic MVNO territory – the predicted arrival of brands such as Nike and Coca-Cola in the market has not happened, and no other MVNO has been able to challenge Virgin.

Virgin boasts up to 4 million active customers; nearest rival Tesco has 500,000. There are ten MVNOs in the UK, which account for nine per cent of the total market, according to CapGemini TME strategic business consultant Jerome Buvat. But as awareness stirs across the Atlantic and Disney and ESPN prepare to launch their own services, it seems as if the idea is finally catching on, although not quite in the way that was originally envisaged. Most industry experts expect MVNOs to increase their market share, particularly in the US, and CapGemini predicts an increase of up to four per cent in Europe this year to 16 per cent.

Talk is cheap

“MVNOs have taken off in different directions,” says Strategy Analytics senior industry analyst Sara Harris, who believes niche and low-cost MVNOs are becoming more popular. A good example is Tesco – one of the few big brands to become an MVNO – which offers Tesco Value mobile, a low-cost SIM card-only product, alongside its more traditional package.

The low-cost model is proving popular in Scandinavia and some observers think the arrival of budget SIM-only operators in the mobile market could have the same impact as no-frills airlines have had on the aviation industry. The analogy is strengthened by the presence of low-cost king Stelios Haji-Ioannou, who launched easyMobile earlier this year.

“All the heavy lifting is done by the network operator,” says Harris. “Internet-based operators do not even have to worry about billing costs.” These companies offer little more than a SIM card, but it has been suggested that the importance of handsets and customer service to low-cost market. Six months after launch, easyMobile only has about 15,000 subscribers.

The other area MVNOs can prosper is in niche markets. Harris says: “Niche operators can be pretty specific in what content they offer. It is a successful method and one that most MVNOs operate on.”

This week, three former Orange marketers launched Dot, a niche mobile service aimed at students. It uses Vodafone’s network, and although the company insists it is not an MVNO, it certainly has similarities.

Freddie Shirley, who has also worked at 3 as well as Orange, has joined the start-up as marketing director. He says: “We run on the Vodafone network and offer our own bespoke tariffs, but equally we will offer some Vodafone services such as Vodafone Live!, which will be free for our customers to browse.”

Toucan play the game

MVNOs are particularly attractive to companies that already offer telephone and internet services. Toucan launched its service, Toucan Mobile, in July and is set to embark on a marketing push later this year. “Toucan Mobile is part of our core business because we are a telecoms company,” says managing director Joseph Blass. Toucan’s offer is post-pay, unlike many MVNOs, which are pre-pay. Toucan also provides handsets, which can help reinforce brand image.

But Virgin Mobile brand director James Kydd is keen to point out that entering the world of communications is not a step that should be taken lightly. Virgin has prospered, he says, because it treated it as a “proper business”.

“When we launched we said we wanted to be perceived as the fifth network,” he explains. “We were able to feed off the Virgin brand. We were making a connection with the youth market but no one else has been as clear on where they want to make an impact.”

Borrowing means little return

Kydd says just “whacking your brand” on a service does not work, pointing to Sainsbury’s attempt to launch an MVNO service. “It’s easy to be led astray and think you are just borrowing someone else’s network, but you still need to build your own service. It is not just about marketing.”

Kydd also believes there is a critical mass of customers needed before MVNOs can regard themselves as major players. “You have to reach 3 million before you get the benefits of being able to market like the big boys,” he says.

Those figures may explain why some brands have not joined up, though another explanation could be the complex relationship with the network operators.

Small mercies

Peter Larsen, chief executive of mobile marketing company Enpocket, says that smaller networks such as T-Mobile usually welcome MVNOs, as they help increase their market share. MVNOs take customers away from their rivals and draw people onto their network, but at the same time operators do not want to lose their own customers to MVNOs. Brands are also at the mercy of the operator’s technical abilities and if the network fails, so will the brand’s mobile service.

Some observers also suggest that network operators may become less obliging to MVNOs once technology develops beyond 3G. Kydd says that once broadband speeds are available on mobile phones, brands could turn to content provision as the best way to establish a mobile presence: “Content is the way forward, but that opportunity will not present itself overnight.”

Whatever the future holds, it seems the branded telecoms market is finally beginning to take off, with MVNOs leading the way. v

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here