Picture this:
As a telco CEO, your task is transforming your company into a tech-centric, customer-first company. Your telco has many markets worldwide, and you don’t have enough time to bring new digital experiences to your customers.
One way of quickly introducing new digital products and digital telco experiences is through Digital Mobile Operator (DMO) brands.
DMOs have the added benefit of letting telcos experiment with different target audiences and experiences before sharing the learnings with the rest of the company. With telcos under pressure to move beyond traditional services and into digital-first business models, this decision has long-term financial and operational implications.
Now the question becomes: to Build or to Partner?
The main challenges of producing DMO capabilities are time and expertise. Depending on your telco’s current set of challenges, there are times when it makes sense to build and times when it makes sense to collaborate with a partner.
Challenges and Considerations When Building a Digital Mobile Operator (DMO) Brand
Telcos of different sizes, locations, and technological maturity have their challenges. When it comes to considering building in-house capabilities or partnering, these are the most common challenges:
Technical Debt of Existing Software
Some traditional telcos have strong network capabilities but may lack the software infrastructure to offer flexible mobile plans and add-ons.
One approach to upgrading existing software involves layering and integrating new software on top existing legacy software, which can messy and expensive to maintain. Another approach is to build new software from scratch, but that could mean investing in build and training that will take time to bear fruit while continuing to pay for existing solutions.
Launching a new DMO brand using new software, a new paradigm, and new teams could require an organisational shake up. Expertise may be tied up in other parts of the business or need to be trained from scratch.
The time needed to launch the DMO brand depends more on your telco’s existing infrastructure and expertise. Building internal capabilities might not be the right choice when developing a new DMO.
Control: Branding and Experience
Targeting a new niche market requires a new brand. Bringing in experienced third parties who are more familiar with this niche could go a long way in building a brand that resonates with them.
Managing DMO costs isn’t straightforward. Building your own capabilities requires upfront capital expenditure but pays off with long-term operational cost savings. Collaborating with a third party reduces the upfront investment, but depending on the arrangement, you may need to share revenue with them. On the other hand, this arrangement also means their skin in the game leads to better long-term commitment.
While your telco is building up its capabilities, it could take longer to adjust to market changes than working with an experienced and specialised telco partner.
Technical Debt of Existing Software
Some traditional telcos have strong network capabilities but may lack the software infrastructure to offer flexible mobile plans and add-ons.
One approach to upgrading existing software involves layering and integrating new software on top existing legacy software, which can messy and expensive to maintain. Another approach is to build new software from scratch, but that could mean investing in build and training that will take time to bear fruit while continuing to pay for existing solutions.
Launching a new DMO brand using new software, a new paradigm, and new teams could require an organisational shake up. Expertise may be tied up in other parts of the business or need to be trained from scratch.
The time needed to launch the DMO brand depends more on your telco’s existing infrastructure and expertise. Building internal capabilities might not be the right choice when developing a new DMO.
Control: Branding and Experience
Targeting a new niche market requires a new brand. Bringing in experienced third parties who are more familiar with this niche could go a long way in building a brand that resonates with them.
While your telco is building up its capabilities, it could take longer to adjust to market changes than working with an experienced and specialised telco partner.
In-house vs. Third-party Digital Mobile Operator Development
With the common challenges of building a DMO covered, let’s compare building your DMO brand in-house or working with a third party to produce it.
The Case for In-house DMO Development
In-house development offers more control, brand continuity, lower risks, and ownership but comes with high upfront costs, longer timelines, and talent challenges.
Key Advantages of In-house DMO Development
Complete Ownership and Control
By developing capabilities, talent, and software for your DMO in-house, your telco will fully own every aspect of the DMO, from the brand, messaging, and customer experience. All intellectual property (IP) around technology, product offerings, and innovations developed stays within the company.
Growing Internal Capabilities
While the learning curve is steep, building in-house capabilities gives you access to talent, operations, and software fully in-house. This includes critical areas such as digital service delivery, automation, cloud architecture, and customer data management. All of this is valuable for future initiatives and for reducing reliance on third parties.
Potential Challenges of In-house DMO Development
Building a DMO and its required capabilities from scratch requires substantial time, resources and coordination, often taking multiple years to implement and go to market.
Building a full-stack digital platform, implementing new technologies, and upskilling staff require large upfront capital investments, which can strain financial resources.
Your telco must also continue paying for ongoing operational expenses such as software maintenance, infrastructure upgrades, and cybersecurity.
Limited Speed and Agility
While your telco's new in-house capabilities are being built, the rigidity of a traditional telco’s legacy systems and internal hierarchies could hinder your brand’s ability to respond quickly to market shifts, new trends, or competitor actions.1
The Case for Partnering with an Experienced DMO Partner
Working with a partner enables faster market entry, reduced financial risk, and access to cutting-edge digital solutions, but at the cost of some dependence on the partner.
Key Advantages of Collaborating on a DMO with a Third-party
When chosen well, a good DMO partner’s expertise and technology stack can help you set up a DMO quickly without limitations from legacy infrastructure.
Sometimes, your partner’s ready-made, full-stack digital solution can help you launch a DMO brand within
16 weeks, like how we launched povo with KDDI in Japan.
Lower Upfront CAPEX and Shared OPEX
Leveraging your partner’s software and expertise can significantly reduce initial setup costs.
Depending on your arrangement, many operational expenses, including IT infrastructure and maintenance, may be shared with the partner, spreading risk and reducing ongoing costs.
Access to Proven Expertise and Playbooks
Partners can complement your expertise through their knowledge of your DMO’s chosen target audience and how best to serve them. Experienced partners will also bring their knowledge gained from working with multiple operators, allowing for more innovative solutions and faster execution.
Addressing Considerations of Collaborating on a DMO with a Third-party
Revenue Sharing Means Your Partner Has “Skin in the Game”
As a CEO, sharing revenue with your partner could initially be a concern, but that means your partner has a strong incentive to help you succeed. This creates a collaborative, win-win scenario while ensuring your partner’s long-term commitment to your telco’s goals.
Brand Control and Data Privacy
Concerns about brand identity or data privacy could arise but can be fully mitigated. Your telcos maintain complete control over their brand, with partners acting as enablers who can guide you without overstepping. Data remains compliant with local regulations, ensuring it resides within the necessary geo-location and access is strictly controlled.
To Summarize:
Choosing between in-house and partner-based DMO development is a strategic decision that hinges on a telco’s unique needs and market positioning.
Both approaches offer clear advantages, but it’s essential to consider how a trusted partner can address key concerns, such as brand control and revenue-sharing models while providing faster deployment and innovative solutions.
By weighing these considerations, you can make informed decisions that accelerate growth and build long-term value for your DMO brands and your telco.
Ready to jumpstart your DMO development with an experienced DMO partner?
Contact us today!
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