Case study: Mobilicity’s Canadian
outsourcing strategy
08 June 2011
Kris Szaniawski
Overview
Canadian new entrant Mobilicity was awarded its license in July 2008 and launched services
over a WCDMA2100 network in May 2010, initially in Ontario and then in November 2010 in
Alberta and British Columbia. Mobilicity holds licenses covering more than half the Canadian
population in 10 major regions (see fig. 1).
Fig. 1: Mobilicity coverage
As a result of the 2008 auction of Advanced Wireless Services (AWS) licenses, several new
mobile operators entered the Canadian market. Mobilicity was one of the new entrants,
having paid US$234 million – US$15 per head of population – for the license.
Before the new licenses were awarded, Canada had one of the least competitive mobile
markets in the developed world, with relatively low penetration and high prices, and was
dominated by three national wireless providers: Bell Mobility, Rogers Wireless and Telus
Mobility. Now the market has nine operators (see fig. 2).
Fig. 2: Canada, mobile subscriptions by operator, 1Q11
Mobilicity distinguished itself from the start by adopting what it calls an “extreme
outsourcing” approach, which involves more or less outsourcing everything other than sales
and marketing.
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Strategic goals
Mobilicity has set itself ambitious growth targets in what is now a crowded market.
The company still has a small subscription base, compared with its main competitors: At
end-1Q11 it had 127,300 subscriptions (see fig. 2). Dave Dobbin, the company’s president and
CEO, admits that in the first six months Mobilicity was still trying to find its feet, but he says
the company has hit its stride and is growing faster than expected.
Mobilicity decided to follow what it called the “Bharti model,” because it did not want to
spend too much on capital outlay up front. As a late entrant to a suddenly highly competitive
market, Mobilicity concluded that it would be difficult to differentiate itself on coverage or
price and therefore decided to try to improve speed and efficiency and focus on specific market
segments.
The operator points out that it has gone a lot further down the outsourcing route than any
of the other operators it spoke to before making this decision but also stresses that it is much
more than just an MVNO.
Business model
Mobilicity has managed-services contracts with two main suppliers, Ericsson and Amdocs.
The operator has only about 300 employees and has adopted a radical outsourcing approach
in which it effectively leaves it to Ericsson to decide what is required to effectively run the
network and to Amdocs to decide which OSS/BSS systems are required.
In addition, customer service and the contact center have been outsourced to BPO company
Sitel, and handset distribution and logistics have been outsourced to technology distributor
Ingram Micro (see fig. 3).
Fig. 3: Mobilicity outsourcing partners
Mobilicity announced a five-year managed-network-operations contract with Ericsson in
April 2010, after having previously chosen Ericsson to design and build its 3G network.
Ericsson handles Mobilicity’s day-to-day network operations and is responsible for front- and
back-office operations and field maintenance. However, the managed-network relationship
with Ericsson is the less unusual aspect of Mobilicity’s radical outsourcing approach, so this
case study concentrates on the relationship with Amdocs.
Amdocs describes itself as the operator’s de facto IT department, running as it does billing,
CRM and other IT systems and processes. Amdocs Managed Services provides end-to-end
support for its own products as well as third-party sales and enterprise systems, including
financials, content management, fraud, data warehousing and business intelligence.
The data center is located in Toronto rather than at a regional network-operations center over
the border in the US.
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Of Mobilicity’s 300 employees, a large percentage are project managers, contract managers
and report analysts, who communicate with business units and report to Amdocs. According
to Dobbin, their conversations with Amdocs are to a large extent about SLA management.
Mobilicity expects Amdocs to come to it with new ideas. There is a flat fee structure, with
bonus payments linked to savings and the acquisition of new subscribers to encourage the
vendor to bring new things to the table to encourage new subscribers. Mobilicity points
out that Amdocs’ managed-services group has thousands of employees worldwide and is
therefore well positioned to add value to Mobilicity’s business by coming up with suggestions
about best practices and functionality that might have been deployed by operators elsewhere.
Dobbin claims rhetorically that Amdocs does everything for the company except manage its
laptops and e-mail. One of the arguments the operator gives for taking so radical a step is its
wish to have as few choke points as possible and thus prevent the inevitable problems that
arise from having multiple points where IT vendors interconnect.
The RFP process that led to the appointment of Amdocs apparently focused more on outcomes
than technical issues. Mobilicity instructed the vendors to advise them not just about
technology and equipment but also about the processes they should adopt, for example asking
for advice on how the provisioning process should work.
Mobilicity says it received 25 submissions in response to the RFP from vendors, consulting
firms and systems integrators. Amdocs’ proposal wasn’t the most expensive or the cheapest.
The operator says Amdocs won points by being the only vendor to answer the RFP without
involving a systems integrator. The operator was clearly eager to have a single company to deal
with rather than multiple interconnection points and therefore was won over by the prospect
of an end-to-end turnkey offering that combined software and systems integration.
Results
Mobilicity says its radical outsourcing approach has reduced its bottom-line costs, made its
costs more predictable, added value to the top line and boosted other areas, such as efficiency
and time-to-market.
Given the number of new entrants, Mobilicity placed a lot of emphasis on speed-to-market.
With Amdocs’ assistance, Mobilicity says it took less than six months to become fully
operational, with the entire server infrastructure and software customized and implemented
in that short period of time largely because Amdocs was able to take advantage of existing
networks and resources.
According to Dobbin, its relationships with a small set of suppliers are by their very nature
close. He jokes that he likes his vendors because they have nobody else to blame when
something goes wrong.
Considering the number of new entrants, Mobilicity decided that it would be difficult to
differentiate on coverage and price. Instead, it has focused on simple, easy-to-understand
offerings and on speed and efficiency. For example, Mobilicity says it can fully provision
a BlackBerry device within five minutes, compared with the 40 minutes it claims it takes
competitors to activate a new phone.
According to Mobilicity, simplicity of product aids satisfaction. With this in mind there is no
bill: The customer simply receives a statement. The operator does not have customer contracts
either, but customers can look up terms and conditions on the website. The operator also relies
heavily on self-service channels and IVR in order to limit the pressure on call centers.
Mobilicity also sets great store by its real-time billing system. It points out that companies
with less-frequent billing cycles, such as two cycles a month, frequently suffer from a big spike
in activity around that point, with a big drain on the call center and website. By comparison,
real-time billing requires more staggered support and is less of a drain on resources.
In terms of initial sales strategy, Mobilicity has made a point of emulating Metro PCS in
the US, focusing on offering “unlimited data” and relatively straightforward price plans.
Mobilicity has targeted immigrants and low-income groups, among others, but is also
increasingly focusing on data-centric services targeted at smartphone users and also sees
wireline substitution as an opportunity.
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Strategic outlook
Amdocs is looking to expand deals that are technology-focused and provide opportunities
for innovation. The vendor says it is not interested in managed-services relationships that
are primarily focused on cost containment or based on a labor-arbitrage model. This is also
increasingly true of operators that are looking for efficiencies and new opportunities rather
than cost savings alone.
Amdocs says there is strong operator appetite for outsourcing holistically, which is to say
working with a single partner. Most of the Amdocs’ managed-services engagements involve
subcontracting, but the vendor is building on its relationships and engaging in partnership
discussions with major network-equipment vendors to expand these further.
There have been suggestions that Mobilicity might consider reducing the number of
managed-services-provider contracts it has to one. In theory, there could be some cost
advantage to so radical a move, but it would not be easy and the operator would lose visibility
of operations and processes.
Informa viewpoint
Mobilicity’s decision to focus on what it sees as core selling and marketing functions and
to adopt a radical outsourcing approach to everything else from day one is a good example
of how far an operator can go down the outsourcing path. But the extent of what has been
outsourced is unusual and will remain so, because it is a strategy most appropriate to a
greenfield operator racing to outstrip other new entrants.
Other operators, such as Bharti Airtel, have adopted a radical outsourcing approach, but it has
tended to be introduced over a period of time and in stages rather than as a big bang, and this
will remain the more common approach.
Mobilicity has a mountain to climb in Canada, considering its low starting point in terms of
market share. It says that simplicity, speed, efficiency and automation will all help it make
inroads into what is turning into a highly competitive market. The outsourcing relationships
the operator has established and its focus on a lean approach to delivering services win
points for being innovative. However, there can be a trade-off between simplicity, speed and
efficiency on the one hand and quality of experience on the other. The current approach is
well focused and should deliver results with the audiences being targeted, but it might prove
more difficult when Mobilicity seeks to broaden its appeal to a broader range of customers.
www.informatm.com
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