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The end of the ACP: How MVNOs can navigate the changing funding landscape

Tilly Michell

May 23, 2024

5 min

The Affordable Connectivity Program (ACP) has come to a close, leaving 23 million US households with a significantly higher phone and internet bill.

Despite bipartisan support from US voters, the ACP has become a contentious issue within Congress. Although there were several last-ditch efforts to save it, June 1st marks the end of this landmark program.

There are fears that the end of the ACP could lead to heavy subscriber losses, particularly for the mobile virtual network operators (MVNOs) that served 60% of the program's mobile beneficiaries. A more positive perspective is that the ACP shut down could offer an opportunity for MVNOs to capitalize on a climate in which millions of Americans may be looking to switch their mobile provider. 

In this article, we’ll dive into the challenges facing MVNOs as they adjust to the changing funding landscape, and explore practical strategies for retaining and acquiring customers.  

The impact of the ACP

The ACP was designed to close the digital divide and accelerate the digital economy, and by all accounts it has been a success. A recent economics paper estimates that, for every dollar spent on the ACP, US GDP increased by $3.89, and there is mounting evidence that affordable connectivity correlates positively with increased employment rates and earnings for low-income households. 

For MVNOs, the introduction of the ACP was an opportunity to gain thousands, if not millions, of new subscribers. The $30 per month mobile subsidy allowed providers to sign up consumers to plans they may not otherwise have been able to afford, leading many MVNOs to become ACP-focused providers. 

According to analysis from New Street Research, 22% of the ACP’s mobile beneficiaries did not have a wireless plan prior to the introduction of the program. The remaining 78% used the ACP to access new products and higher service tiers. Now that the program has come to an end, the question remains whether the majority of mobile participants will stick with their existing plans, downgrade to a cheaper plan, or be forced to disconnect altogether. 

Keeping America connected

Mobile connectivity is no longer a luxury; it’s a necessity. It's crucial that MVNOs find viable solutions to keep low-income households connected, while protecting their bottom line.  

Retaining existing customers 

It's more convenient to stay with an existing provider than to switch. With this in mind, MVNOs with a large ACP subscriber base should invest in a switching campaign to maximize the conversion rate of customers rolling off the ACP benefit onto a standard prepaid MVNO plan. For the best results: 

  • Focus on engaged customers first. Personalize outreach and meet them where they will be most responsive. Phone calls, SMS, email, and in-person campaigns are all effective switching channels

  • Customize plan offerings for each subscriber segment: Those on basic plans could be encouraged to switch to low-allowance fixed GB plans with a palatable price tax, while those using the ACP to access additional products and services could be presented with premium plans at a higher price point. 

  • Incentivize customers with attractive acquisition offerings. Explore various solutions including introductory rates, family bundles, and lower allowance plans. Other options could include a discount for upfront payment, and the ability to pause the use of data while keeping their number live.

  • Stay on top of the latest news. Government funding programs provide seismic opportunities. MVNOs must remain informed and agile in order to capitalize on the shifting funding landscape. 

  • Become a source of truth for customers. Provide them with up to date information on alternative government subsidies, including benefits such as Lifeline.

Attracting new customers 

As millions of Americans examine their phone bill and weigh up the benefits of switching, MVNOs should launch targeted marketing campaigns aimed at those impacted by the ACP wind down. 

  • Messaging should focus on affordability and ease of switching. Introductory offers, family bundles, and discounts for targeted groups such as seniors and veterans can help providers stand out.

  • A streamlined approach to SIM provisioning and activation will build trust with new customers. 

  • Simple strategies, such as giving customers an easy way to check the network coverage in their local area, as well as a streamlined sign up process, can help reduce friction for customers. 

Appealing to new demographics

The relative ease of signing up new customers via the ACP subsidy led many MVNOs to become laser-focused on a single audience segment. These providers can future-proof themselves by expanding their offering and diversifying their audience demographics.

Rising eSIM adoption and the convenience of online switching have made it easier than ever for users to change providers and set up additional wireless plans for work and travel. Meanwhile, the growing popularity of wearable tech, such as smartwatches, means an increasing number of consumers now require more than one data plan. 

Many people are unsatisfied with the “catch all” plans offered by larger carriers, and want services that suit their specific needs. Whether that’s data-only plans, bundled offers, value-added services, or multi-lingual customer support. Agile MVNOs are well positioned to win these customers by offering flexible plans that suit changing consumer requirements. 

Building a sustainable future

MVNOs need a plan to retain and diversify their customer-base as funding policies shift (as they inevitably do). By leveraging customer insights, affordable pricing plans, simple SIM exchange logistics, and a solid marketing strategy, MVNOs can future-proof their business and capitalize on the opportunities that emerge when legislation changes.  

When it comes to agility, telecom-as-a-service (TaaS) can give MVNOs an edge. With TaaS, MVNOs can access customer analytics, subscription management, multi-carrier wholesale connectivity, customer service, billing, and more through a single API integration. It’s by far the fastest and most efficient way for tech-enabled businesses to upgrade their mobile service and offer superior experiences to customers.    

If you’re an MVNO looking to modernize your service and gain an edge over competitors, get in touch with our team at Gigs.

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