MVNOs are innovating and product and pricing capabilities are key to unlocking new opportunities

Thursday, 26 May 2022

The importance of Mobile Virtual Network Operators as essential contributors within the broader mobile ecosystem is underlined by the numbers. Analyst firm Mordor Intelligence expects the MVNO market to reach a value of USD 91.63 billion by 2026, registering a CAGR of 6.75% over the period 2021-2026[1]. New technologies like e-Sim, AI, ML, and edge computing are already creating new opportunities and augmenting demand for mobile virtual network operator services.

However, while MVNOs bring new services and value propositions to bear, the market itself is growing increasingly difficult to navigate. In this series of blogs, we’ll investigate the four greatest challenges that MVNOs presently face. Specifically, in this first article, we’ll consider how consumer focused MVNOs, the sector’s traditional commercial model, can unlock innovation with enhanced product and pricing capabilities.

Innovative product and pricing models are table stakes for progressive players

Innovative approaches to product and pricing are rapidly becoming key components of successful commercial strategies. Such approaches can be realised to great effect in the form of targeted value propositions for niche segments of customers. This is important not just for the MVNO itself but also for the host operator, for which the MVNO helps to boost network usage and bring additional mobile services to diverse populations of prospective users.

MVNO service offerings have already shifted from voice and text to data-centric, and the market generally is now widely populated by differentiated value propositions around integrated offerings tied to “other” company’s other goods and services, such as gaming or enterprise cloud services. MVNOs can drive innovation in this area via policy and charging controls, on a per user basis. By controlling policy rules the service provider can unlock an opportunity to change service performance parameters, so that different services can have different performance levels that deliver benefits to the end customer.

Innovation required across the market, consumer and commercial

In another example of innovation, as industrial digital transformation proliferates, more industry-specific MVNOs will likely aim to exploit opportunities around the Internet of Things (IoT) and machine-to-machine (M2M) as well as global connectivity.  Here, the opportunity will lie in out-of-the-box connectivity bundled with devices and other services in the “everything connected world”.

A third area in which MVNOs can innovate is in applying and charging for a range of different data Quality of Service (QoS) policies, Doing so enables the MVNO to create distinct packages that meet the needs of different customer groups while extracting the maximum return from their wholesale data deal. Again, relying on policy control, the operator in this scenario can deliver different Quality of Service (QoS) mechanisms, allowing applications to be optimised – such as gaming, or live streaming, for example.

Wi-Fi, where innovative value propositions that lower costs and improve service quality are increasing, represents another domain that is yielding opportunities for innovation. For instance, in some cases MVNOs are using cellular to improve the quality of Wi-Fi calling. Google Fi has pioneered using multiple host networks with intelligent switching between networks as well as a Wi-Fi first approach with built-in security. These and other innovations are allowing MVNOs to harness digital transformation as a means to become more flexible, customer centric, and efficient in operations and cost structure.

Standing still isn’t an option

For MVNOs, innovating in ways such as the examples above and others is, increasingly, no longer optional. As competition and price pressures as well as market saturation for mobile services ramp up, MVNOs will have little choice but to innovate and differentiate on value proposition and cost structure just to maintain their current market position, let alone grow market share.

MVNO: The 5G Generation

Furthermore, the pace and requirement for innovation is only likely to increase. The arrive of 5G is likely to bring with it deployments that enable network slicing and these in turn will create a new generation of MVNOs that will likely target specific verticals with solutions that bundle connectivity needs with cloud services and AI/big data solutions.

A new breed of MVNOs that taps opportunities here will likely seek to target smaller enterprises and entrepreneurs to access AI/big data and cloud services that they might otherwise fail to access.

Meeting the challenge

To be in position to innovate on product and pricing capabilities and to thereby be in position to exploit market opportunities founded on the current proliferation of technology advances, MVNOs must be able to deploy and leverage a complete solution for launching multiple MVNO propositions and businesses. Critical aspects of the required platform include:

  • Highly scalable, providing a stable foundation for growth
  • Real-time service management, for products, pricing, and promotions
  • Supports full customer life cycle, from acquisition through to advocacy
  • Powerful, insightful business intelligence to support business growth and performance optimisation

Digitalk’s Mobile Cloud, established and proven as an enabler of commercial success for MVNOs for over a decade is one example of the bedrock on which the strategies that will underpin future success can be realised. To learn more about the challenges faced by MVNOs, download Part 1 of our MVNO Innovation Briefings.