An In-Depth Guide on MVNO for Business Executives
Updated: Sep 1, 2023
You might not be familiar with their official name, but many mobile service providers worldwide belong to this group. They provide a range of fantastic cell phone plans worth considering if you’re in the market for a new device. Further, we will dwell on MVNO: its core principles, benefits, and synergy with the latest technologies.
The difference between MNO, MVNO, MVNE, & MVNA
Despite mainly one letter difference, each notion has its peculiarities and distinctions.
MNO (Mobile Network Operator). It is a significant player in wireless communication services, responsible for providing and delivering these services to end users. To accomplish this, MNO takes charge of various essential components, including radio spectrum allocation, wireless network infrastructure, backhaul infrastructure, billing systems, customer care, provisioning computer systems, and many more. It’s worth noting that an MNO can delegate certain systems or functions to external entities and still retain its status as a mobile network operator.
One crucial aspect that sets it apart is the ownership or control of a radio spectrum license, typically obtained through a regulatory or government entity. This authorization grants the MNO the privilege of accessing and utilizing the radio spectrum, ultimately enabling them to deliver their services effectively.
MVNO (Mobile Virtual Network Operator). MVNOs, in contrast to MNOs, operate distinctly by not owning their telecommunication towers. Instead, they forge partnerships with various entities, such as MNOs and roaming partners, to leverage their services and combine them into a centralized package that facilitates seamless customer connectivity. By collaborating with MNOs and roaming partners, they can curate a comprehensive range of services for their clients. As a result, MVNOs boast an extensive reach, encompassing a global coverage that stems from multiple affiliations across various MNOs and partners.
MVNE (Mobile Virtual Network Enabler). It is an organization that specializes in delivering comprehensive infrastructure solutions tailored to MVNOs. Their services include:
billing
administration
BSS
OSS
provisioning for back-end network elements
By collaborating with an MVNE, MVNOs can enjoy the benefits of capital expenditure deferral. Furthermore, it’s common for MVNEs and MVNOs to establish risk or reward-sharing arrangements, creating a mutually beneficial partnership.
MVNA (Mobile Virtual Network Aggregator). The MNO has a strategic alternative known as an MVNA, a valuable intermediary between the MNO and multiple smaller MVNOs. Instead of numerous smaller MVNOs establishing direct connections with the MNO, an MVNA acts as a connector, linking these smaller MVNOs to the MNO. It is important to note that an MVNA rarely has its subscribers; its primary role revolves around facilitating the operations of MVNOs. Hence, an MVNA often possesses dedicated business and operating systems to manage its intermediary functions effectively.
Related: It’s Better to Rent than to Create. How the Telecom and Retail Domains Can Benefit from MVNOs
How does MVNO work? Core principles and areas covered
Network infrastructure leasing. By leasing capacity from MNOs, MVNOs avoid the necessity of developing and operating their own communications infrastructure. This arrangement enables MVNOs to deliver voice, message, and data services without spending heavily on establishing a network.
Branding and marketing. MVNOs differentiate themselves by creating their unique brand and devising effective marketing strategies. They develop pricing plans, service offerings, and customer experiences tailored to their target market. By doing so, MVNOs can attract clients through their distinct brand identity and value propositions.
Service differentiation. By providing specialized services or addressing specific consumer categories, MVNOs distinguish themselves from other mobile operators. Some of them may target specific markets, such as providing youth-focused plans, business-focused services, or permitting low-cost overseas calling. They bring in clients with particular demands that regular MNOs may not completely provide by tailoring their solutions.
Subscriber management. MVNOs take charge of customer acquisition, billing, and support. They independently manage their subscriber base, allowing them to maintain direct control over the customer relationship. MVNOs often provide customer support through their channels, ensuring consistent and personalized assistance for their subscribers. They may charge interest rates of up to 30%. However, the majority offers the flexibility for customers to bring their own devices if they don’t need a new phone, as long as the device is unlocked and compatible with the MVNO’s network. This allows customers to utilize their existing devices without any issues as long as they meet the requirements set by the MVNO.
Wholesale pricing. MVNOs negotiate wholesale pricing agreements with MNOs to gain access to network resources. They purchase network capacity in bulk and subsequently package and resell it to their customers at retail prices. This approach empowers them to establish their pricing structures and potentially offer more competitive rates than MNOs.
Integration and operations. MVNOs integrate their systems with the MNO’s network infrastructure to deliver seamless services. This involves harmonizing billing systems, network provisioning, and customer management. They must ensure smooth operations and interoperability with the MNO’s systems to provide a consistent and reliable customer service experience.
Revenue sharing. MVNOs generate revenue primarily by selling mobile services like voice, messaging, and data plans. In exchange for network access, MVNOs typically share a portion of their revenue with the MNO. The specific revenue-sharing model depends on the negotiated agreement between both parties.
What are the top business benefits that MVNO can deliver in 2023?
MVNOs have been present in the telecommunications industry for many years. However, they have recently experienced significant growth, primarily propelled by the offerings introduced by cable companies. This growth has elevated MVNOs to a new level in the United States, accounting for 31% of all post-paid net wireless additions in Q3 2022, up from 25% in 2021. Notably, the two largest cable companies have amassed over 10 million mobile customers, further emphasizing the substantial presence and impact of MVNOs on the market.
The ecosystem of IoT MVNOs has experienced substantial growth and is expected to maintain its strong trajectory, resulting in a worldwide provision of approximately 220 million connections by 2026. This global expansion demonstrates the increasing prominence of IoT MVNOs and their pivotal role in the developing landscape of connected devices.
Business benefits for telco enterprises
Telecom operators are key players in the MVNO market, supporting various MVNO enterprises in expanding their market presence. By establishing MVNO solutions development, telecom operators can effectively meet the market’s demands.
Regulators widely believe that the MVNO model offers a cost-effective and time-efficient avenue for telecom operators to enter the market. This fosters increased competition, directly benefiting the customer base.
The telecom industry is witnessing a rising prevalence of MVNO solutions development. CSPs adopt the MVNO model in two distinct ways.
Firstly, CSPs can act as MVNO providers by renting their wireless network infrastructure services to other companies. This strategic shift allows them to operate in a B2B and B2C manner, attracting a diverse audience and generating significant revenue. When CSPs serve as MVNO providers, they bring a competitive advantage to the MVNO market.
Secondly, CSPs can be MVNO clients, wherein larger companies establish their MVNOs. Creating their own MVNO enables these companies to engage with specific target audiences, offering benefits such as conducting version testing with a broad user base, quickly introducing new offerings, and building brand reputation. By leveraging the MVNO telecom operators (MVNO telecom solution providers), these companies bridge gaps in their service offerings and establish connections with multiple providers through different infrastructures.
Advantages for retail enterprises
“Launching an MVNO has several benefits for retailers as it can be used to leverage their shops, their online presence, and their distribution capabilities. At this time, new opportunities are opening up for retail mobile virtual network operators (MVNOs), including a better understanding of consumers or the improvement and optimization of the retail experience.”
MVNO solutions development holds significant importance in the retail sector as well. Prominent players have adopted solutions to enhance customer communication and foster brand loyalty.
Customer-centric approach
By leveraging real-time client data analysis, MVNOs gain insights into customer behavior, patterns, and their overall experience with the brand and services. This business model suits expansive distributor networks, such as large enterprises and store chains.
Uplift in sales
The presence of MVNOs enables retailers to enhance their sales through cross-selling and upselling. It also facilitates the scalability of the business model and expands the reach to a broader audience.
Competitive offering
Given the highly competitive nature of the retail market, the incorporation of MVNO solutions development provides the agility required to retain customers and offer tailored solutions with omnichannel support. It fosters close customer interaction, delivering a personalized touch to services. MVNOs directly translate the brand’s value, promoting customer retention and cross-promotion. Today, an increasing number of retail companies recognize the power of MVNOs within their diverse sector.
The synergy of 5G and IoT with MVNOs. What are the outcomes?
The impact of 5G on MVNO business model
The 5G market within the MVNO sector is projected to achieve a remarkable value of $9.9 billion by 2028. This forecast indicates a significant growth opportunity for MVNOs to leverage the potential of 5G technology. The upcoming years hold promising prospects for capitalizing on the expanding market and reaping substantial financial benefits.
The emergence of 5G technology opens up exciting possibilities for existing MVNOs to expand their consumer-focused services. With enhanced mobile broadband, they can offer a range of applications and services to consumers, including web browsing, video streaming, mobile office solutions, and connected vehicle experiences. However, the 5G MVNO market goes beyond consumer services and presents a thriving business services market thanks to the introduction of innovative capabilities that:
leverage substantial reliability
ensure latency
provide network capacity enhancements
enable highly scalable and efficient networks
As a result, MNOs can now share network resources with MVNOs to an unprecedented extent. This collaboration creates a dynamic and scalable environment, empowering MVNOs to seamlessly extend their services and capabilities.
The brightest offerings of 5G MVNO
5G technology amplifies the existing consumer-focused offerings of MVNOs and fosters a robust market for business services. The new generation opens up new opportunities for network operators to venture into the realm of MVNOs. For instance, Vodafone has already introduced its in-house MVNO called Voxi, while O2’s GiffGaff and Three’s Smarty are other examples. With 5G, operator MVNOs are likely to become more prevalent, thanks to the “network of networks” concept. It supports diverse access technologies and introduces neutral hosting partnerships between local authorities and private investors.
In this context, neutral hosting allows operators to connect their existing communication networks to shared infrastructure within urban environments. They can then lease space on this infrastructure and access the associated technologies, effectively transforming themselves into a form 5G MVNO. By leveraging neutral hosting, operators can enhance their services and expand their reach by tapping into shared resources, fostering collaboration between various stakeholders in the telecommunications ecosystem.
The impact of IoT on MVNO business model
According to a projection by ABI Research, the IoT MVNO market is poised for substantial growth, with the total revenues of participants expected to surpass US$2.5 billion per year by 2026. This estimate indicates a remarkable compound annual growth rate (CAGR) of 18.5% over five years, starting from 2021. The forecasted expansion reflects the increasing demand for IoT connectivity solutions and the significant opportunities that lie ahead for MVNOs operating in this domain.
Unlike traditional mobile devices, IoT devices have distinct connectivity needs, such as low bandwidth and power consumption. As a result, there is a growing demand for specialized connectivity solutions designed specifically for IoT devices.
MVNOs are well-suited to address this need as they can offer customized connectivity plans that align with the specific requirements of IoT devices. These plans can be assimilated to provide optimized connectivity that meets the unique demands of IoT devices. This often involves dedicated networks that are purpose-built to accommodate the specific characteristics of IoT devices, ensuring efficient and effective connectivity.
Using their IoT domain experience, MVNOs can provide the necessary infrastructure and services to enable seamless connectivity. They offer a range of specialized solutions that consider factors like power consumption and other specific requirements of IoT applications. This allows businesses and industries to explore the full potential of IoT technology while ensuring reliable and efficient connectivity.
The constant development of novel IoT applications further amplifies the demand for IoT connectivity and services as enterprises recognize the potential for improved productivity, cost savings, and enhanced customer experiences.
IoT MVNO: case study
KMD is a prominent software and service solutions provider in Denmark. It actively develops and delivers comprehensive solutions to the municipal, state, and business sectors. To bolster its IoT capabilities, it partnered with Cobira and leveraged its advanced IoT connectivity platform. This strategic collaboration has provided KMD with a robust foundation to offer end-to-end IoT solutions alongside their existing services. IoT plays a pivotal role in KMD’s future strategy, as they aim to optimize and enhance the value of their current solutions and IT services through IoT integration.
Cobira empowers KMD with a sophisticated platform characterized by its multilevel, multi-tenant, and white-label capabilities. It grants KMD complete control to design and establishes tailored connectivity services for specific use cases. Cobra has established 14 roaming agreements with various operators globally, resulting in over 3700 bilateral network agreements. This extensive network coverage ensures Cobira can deliver critical Industrial IoT connectivity with mobile network redundancy in nearly all countries worldwide. Through their partnership with Cobira, KMD gains access to a comprehensive IoT connectivity ecosystem, enabling them to develop and deploy innovative IoT solutions that address the unique needs of their clients.
Summary
MVNOs play a significant role in telecommunications, offering unique advantages and opportunities for business and retail enterprises. By leveraging partnerships with MNOs and roaming partners, MVNOs can provide global coverage to their customers without owning their telecommunication infrastructure.
The synergy between MVNOs and emerging technologies, such as 5G and IoT, also presents further growth prospects. The deployment of 5G technology expands the consumer-focused and business services market for MVNOs, while IoT connectivity solutions cater to the specific requirements of IoT devices. With the projected growth and increasing demand for MVNO services, businesses can enhance customer communication and foster brand loyalty.
