Undoubtedly, technological progress and rapid development have a significant impact on global economic development. Together, these have created an opportunity for the emergence of new business models in place of others. The Mobile Virtual Network Operator, or “MVNO,” is one of these models. But exactly what is it all about?
MVNOs are created when the conventional mobile value chain is broken. With the use of valuable assets, new actors can thereby enter the mobile value chain and subsequently extract their own value. These can range from a branded reseller, where the venture merely offers its brand and the mobile network operator (MNO) handles every aspect of operation, to a full-MVNO, where the MNO simply provides the network infrastructure and the venture handles everything else.
Advantages of This Business Model
This business model benefits both MNOs and MVNOs. MNOs can take advantage of their network capacity, IT infrastructure, service and product offerings to target underserved markets, introduce new wholesale revenue streams and lower the cost per user while sparing capacity.
An MVNO, meanwhile, can take advantage of its customer base, distribution networks and brand recognition to offer clients specialized goods, value propositions and supplementary services. MVNO projects deliver a new source of income, a low-cost approach to entering the mobile industry, a new way to bolster the value proposition and perhaps even a plan to boost client acquisition and/or retention.
A Few Drawbacks
The infrastructure and cell towers used by mobile phone service providers are not owned by them. The providers merely lease space, provide appealing pricing and serve millions of customers. Therefore, many disadvantages must be taken into consideration.
MVNO customers momentarily lose priority when the network is overloaded, meaning they will temporarily operate more slowly. Peak hours are when this deprioritization is most likely to happen ( MVNO subscribers will rarely have any issues outside those times). This lull might create a problem in the case of work calls and other such communication priorities.
Another issue is that of roaming coverage, which is not provided by mobile phone services. Only places with cell phone towers owned by the parent firm will receive coverage. There is no cell phone coverage when there is no infrastructure from these major players.
Add to that the issue of poor customer service. The majority of MVNOs don't have strong customer support. Instead, customers often face long wait times and inadequate customer support representatives.
Another Wave of Change
As a result of changing demand, competition and technological improvements, MVNOs and their MNO hosts are confronting new opportunities as well as new challenges .
Nowadays, MVNOs are addressing specific value propositions and market segments. MVNOs serve as a "sub-brand" for the operator by concentrating on distinct value propositions for specialized target customer groups, which helps to make mobile services accessible to a variety of demographics. Voice and text-based MVNO service offerings have given way to data-centric ones, and some have developed differentiated value propositions like gaming or enterprise cloud services as well.
On the same level, competition and pricing pressures are making it more important than ever for MVNOs to innovate and stand out in their value offering and cost structure, particularly as MNOs develop their specialized offers for specific market segments (young, military, elderly and immigrants) as they deal with market saturation.
With network slicing enabled by 5G deployments, a new breed of MVNOs is set to target specific industries with solutions that combine their unique connection needs with cloud services and AI/big data solutions. The potential of AI, big data and cloud services will be accessible to smaller businesses and entrepreneurs thanks to these new MVNOs.
A new generation of MVNOs will target certain industries with solutions that combine their specific connection demands with cloud services and AI/big data solutions, thanks to network slicing made possible by 5G deployments. These new MVNOs will make the potential of AI, big data and cloud services available to smaller enterprises and entrepreneurs.
The Market Outlook in Ten Years
Between 2022 and 2032, the MVNO market is anticipated to expand its reach in the global market at a moderate compound annual growth rate (CAGR) of 7.7%.
The MVNO market is expected to grow to US$147.7 billion by 2032 from an estimated US$70.3 billion in 2022. Previously, the market expanded at a faster CAGR of 8.3% (from 2016 to 2021), reaching a value of US$64.8 billion in that year.
The MVNO industry is extending its impact on the global market by running private networks to improve the work experience, including work, thanks to high mobile penetration, increased machine-to-machine (M2M) transactions and low-cost cellular services.
The MVNO market is driven by the emergence of new digital services, including mobile money, machine-to-machine transactions and cloud computing, as well as the convergence of these technologies with the Internet of Things, artificial intelligence, machine learning and other enablers. With such a relevant array of technologies and contexts, the industry is sure to keep its momentum going.
