In an increasingly digital world and fragmented telecommunications industry, mobile virtual network operators (MVNOs) are on the rise, applying emerging technologies, exploring new verticals and offering value to both consumers and existing mobile network operators (MNOs).
MVNOs are wireless services providers that do not own the wireless network infrastructure but instead buy network capacity from existing MNOs to offer services to their users.
‘It’s a way to open up networks to have other providers come in and offer services.’ – Susan Welsh de Grimaldo, Director, Service Provider Strategies, Global Wireless Practice, Strategy Analytics
Together with mobile virtual network enablers (MVNEs), which provide network infrastructure and related services to MVNOs, MVNOs allow carriers to expand into new geographic areas and offer unique features and products, increasing connectivity and responding to niche consumer demands.
“MVNOs are well-established in developed markets, and will become increasingly important in developing markets as they mature,” says James Joiner, senior analyst of service provider and platforms at IHS Markit.
The evolving MVNO landscape is on display during the MVNO World Congress in Amsterdam this week.
The event comes at a time when MVNOs are joining ITU in increasing numbers and ITU’s Emile Armour-Heselton will be on hand to discuss the range of ITU membership benefits available to MVNOs and MVNEs.
The dynamic industry change was also the subject of the workshop “Rise of the MVNOs: Leveraging MVNOs in an ‘everything connected’ world” at ITU Telecom World 2018 in Durban, South Africa last fall.
The workshop examined the relationships of MVNOs with verticals including banking, utilities, agriculture, transportation and Smart Cities, and explored opportunities of emerging technologies including the Internet of Things (IoT), machine-to-machine (M2M), blockchain, 5G and Artificial Intelligence (AI).
The participants of the workshop, which included industry leaders, government officials and representatives from MVNOs, MVNEs, and MNOs, also collaborated to create a roadmap for strategic alliances between MVNOs, verticals and other industry players.
ITU allocates Global International Mobile Subscriber Identity (IMSI), which enable “global SIMs” that provide network-agnostic, cross-border connectivity at one price. MVNOs’ membership and engagement with ITU gives them the opportunity to collaborate on regulatory issues and explore the implications of emerging technologies on the industry.
One of the main benefits of MVNOs is that they provide competition, which can result in lower prices for consumers, says Susan Welsh de Grimaldo, Director of Service Provider Strategies for Global Wireless Practice at Strategy Analytics.
“It’s a way to open up networks to have other providers come in and offer services,” she says. “One of the trends we’ve seen is for regulators to open up the market to more competition to potentially encourage price competition to benefit consumers.”
MVNOs can also provide niche services to targeted consumers, Joiner says.
“In addition to providing low-cost connectivity to consumers, MVNOs can develop service offerings to appeal to specific market segments that are overlooked by MNOs,” he says. “For instance, ethnic MVNOs such as Lebara play a valuable role in providing low-cost connectivity to consumers who frequently make international calls.”
By segmenting the market, MVNOs can focus on specific value propositions and offer products and services catered to groups of consumers, Welsh de Grimaldo says.
“It could certainly create more opportunity to extend reach to potential new user segments who might be credit challenged, or offer a particular value-proposition,” she says. “It might be content that they like to have, it may be affiliation with a retailer brand and loyalty program that offers benefits.”
For MNOs, MVNOs can help extend their area of coverage, increasing connectivity and allowing them to access more users without necessarily diluting their brand, Welsh de Grimaldo says. MNOs can work with existing MVNOs, acquire them or create their own.
“Some [MNO] operators have embraced the MVNO opportunity as a way to get profitable data traffic on their networks,” she says. “For them, they can create profitable data traffic, and they can extend the reach of the subscriber base on their network.”
‘MVNOs need to have a clear value proposition. They can’t be everything to everybody.’ – Welsh de Grimaldo
It also allows MNOs to gain additional return on investment on expenses such as network deployments and builds, as well as provide services in specific areas they don’t necessarily have a value proposition to pursue, such as cloud-based or AI-related services, Welsh de Grimaldo adds.
“Not everyone is going to have their own cloud services or data scientists,” she says. “If you can create a way to do that more cost effectively and distribute it out with a niche MVNO, I think it gets very exciting how that unleashes economic power in the market.”
The MVNO market has seen a number of failures, as companies struggle with issues of scale and increased competition, Joiner says.
“MVNOs are facing increased competition in many markets, as mobile operators launch sub-brands to directly compete with MVNO offerings,” he says.
But MVNOs have a unique opportunity to continue to develop and appeal to new user segments, Welsh de Grimaldo says.
“It’s not just the low-cost, pre-paid offering, where you can pick up a SIM card at your local retail or corner market,” she says. “It’s evolved quite a bit and there a lot of opportunities for it to evolve.”
Moving forward, there are increasing opportunities for MVNOs to focus on new technologies including AI, Big Data, Connected Cars and IoT. They can also pursue new verticals, expand connectivity to emerging markets to connect the unconnected and offer key services to specific users, Welsh de Grimaldo concludes.
“MVNOs need to have a clear value proposition,” she says. “They can’t be everything to everybody. And they need to define their niche. If they can do that cost-effectively, then it makes sense. It’s not an easy business. But there is opportunity and appetite from consumers for other brands that provide services.”
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