Susan Welsh de Grimaldo, Director, Service Provider Strategies

The world of Mobile Virtual Network Operators (MVNOs) is facing another wave of change as evolving competition and demand along with technology advancements brings new opportunities and challenges for MVNOs and their Mobile Network Operator (MNO) hosts. Strategy Analytics digs into top 5 trends in MVNOs and key questions to consider to successfully navigate the evolving world of MVNOs.

1)            MVNOs are addressing specific market segments and value propositions

By focusing on specific value propositions for niche target segments of customers, MVNOs bring additional segments into the subscriber base on the host operator network without diluting the focus and brand image of the host – in effect the MVNO acts as a “sub-brand” for the operator and helps to bring mobile services to diverse populations.

MVNO service offerings have shifted from voice and text to data-centric, and some have built differentiated value propositions around integrated offerings tied to the parent company’s other goods and services, such as gaming or enterprise cloud services. In the consumer space, where convergence of fixed/mobile/content services aid in gaining stickiness and lowering churn, cable companies are expanding into mobile through MVNOs as a faster, cheaper market entry approach than building a network. “Bring Your Own Device” (BYOD) and used and refurbished handset markets have made it easier for MVNOs to make accessible more highly featured devices and previous generation flagship smartphones to lower income users.

As we move more into industrial digital transformation, we will continue to see more industry specific MVNOs targeting IoT/M2M and global connectivity.  These providers will aid in expanding out-of-the-box connectivity bundled in with devices and other services in the everything connected world: vehicles, medical devices, wearables, industrial equipment, etc.

2)            MVNOs are embracing innovation and transformation

Competition and price pressures– especially as MNOs create their own targeted offers for specific segments (youth, military, elderly, immigrants) as they face market saturation– means more than ever that MVNOs need to innovate and differentiate on value proposition and cost structure.

One area where MVNOs have focused is on strong Wi-Fi first value propositions to lower costs and improve service quality. For example, in the US, Republic Wireless developed Bonded Calling, using cellular to improve the quality of Wi-Fi calling. Google Fi has been a pioneer in using multiple host networks with intelligent switching between networks as well as a Wi-Fi first approach with built in security.

MVNOs are also embracing digital transformation to be more flexible, customer centric, and efficient in operations and cost structure.

3)            New technology enablers drive new opportunities for MVNOs

Five key technology enablers will expand opportunities for MVNOs:

• e-SIM for out-of-box connectivity and ease of use
• Network Function Virtualization (NFV) and Software Defined Networks (SDN) – NFV/SDN will enable new levels of fast time-to-market (TTM) self-service and use of virtualized PGW (packet gateway) on the host network to manage costs of wholesale data through traffic shaping to reduce video traffic costs, for example
• Artificial Intelligence and Machine Learning (AI/ML) with data analytics to support improved customer personalization and next-best action, or to provide data on the device performance for IoT, as well as for more efficient operations
• Blockchain – especially for areas like mobile payments/mobile banking/microloans, but also for ecosystem partnerships and supply chain management
• Edge compute –MVNOs may choose to offer distributed computing power of their own to tap into the wireless network of the host, or use the MNOs (or another partners) edge computing to offer services to their customers

4)            5G will enable a new generation of MVNOs

With 5G deployments enabling network slicing, we will see a new breed of MVNOs target specific verticals with solutions that bundle their specific connectivity needs with cloud services and AI/big data solutions. These new MVNOs will open up opportunities for smaller enterprises and entrepreneurs to tap into the power of AI/big data and cloud services. With SDN, we are seeing more self-service portals for enterprise services and this could be extended so an enterprise MVNO could assist in spin up/down/quick TTM for adding services for smaller companies.

5)            MVNOs Benefit Society

MVNOs have a real opportunity to improve lives and societies by opening up the benefits of mobile services to lower income families and smaller companies and entrepreneurs/start-ups to help them move ahead faster in their markets and contribute to local economies. IoT-centric MVNOs can address global climate and environmental issues by enabling connected agriculture and smarter transportation, as well as improving healthcare and enabling smart cities.

Key Questions for MVNOs to consider:

• What value propositions most resonate with potential target segments?
• What brands are best positioned to offer certain services?
• How can an MVNO build a differentiated IoT offering?
• How do MVNOs best make use of new technologies?

Strategy Analytics works with companies across the mobile ecosystem and around the globe to address  these types of questions to drive toward successful businesses that improve our world.