Introduction

How will 5G MNVO models differ from what’s gone before? MVNOs occupy an important set of market niches in the mobile industry, ranging from low-cost generic consumer propositions by discount retail brands, through to some of the most advanced mobile offers, based on ingenious service-level innovation.

The importance and profile of MVNOs varies widely by country and target market segments.  Worldwide, there are around 250 million consumer subscribers using virtual operators’ branded services. IoT-focused MVNOs add many more. In many developed markets, MVNOs account for around 10-15% of subscribers, although in less-mature markets they are often not present at all, or are below 5%.

In Europe, the most mature region, there are around 100m subscribers, focused particularly on German and UK markets. Globally, MVNO revenues are estimated at around $70bn annually – a figure expected to grow to over $100bn in coming years, as markets such as China – which already has over 60m MVNO subscribers – gain more traction, bolstered by regulatory enthusiasm. IoT-centric and enterprise MVNOs are also growing in importance and sophistication, particularly for cross-border connectivity management.

While many MVNOs are aimed at lower-end consumers, with discounted packages under retail, banking or other brands, plenty more are more sophisticated and higher-ARPU propositions. Some fixed/cable operators want a mobile wholesale offer to expand into quad-play bundles. Increasingly, the MVNO model is going far beyond mass-market consumer offers, towards IoT and enterprise use-cases, that can add extra services and functions in the network or SIM.

Some 4G-only mobile operators have 3G MVNO arrangements for customers moving beyond their infrastructure footprint. Google has its pioneering Fi MVNO service, which switches users between multiple telcos’ infrastructures – and which is perhaps a testbed for its broader core/NFV ambitions. A variety of frequent-travellers or enterprise users seek customised plans with extra features, that mass-market MNOs cannot provide. In addition, many IoT connections are also provided by third parties that repackage MNOs’ network connectivity, often to provide global coverage across multiple underlying networks, tailored to specific segments or verticals. For example, Cubic Telecom, an automotive-focused CSP, is part-owned by Audi.

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Operating with a variety of different business models and technical architectures, MVNOs are also relevant to mobile markets’ competitive functioning, especially as larger networks consolidate. Regulators vary in the degree to which they encourage virtual operators’ establishment and operation.

Some MVNOs, described as “full” or “thick” operate their own core networks, while other “light” or “thin” providers are essentially resellers, usually with their own billing platform but little more. Confusingly, some avoid the use of the term MVNO, especially in the IoT arena, often just describing themselves as offering “managed connectivity” or similar phrases.

Figure 1: Thick vs thin MVNOs and resellers

Source: Mobilise Consulting

This all presents a challenge for normal mobile operators – at one level, they want the extra reach and scale, using MVNOs as channels into extra customer groups they cannot easily reach themselves. They may even want their own MVNO operations in countries outside their licensed footprint – TurkCell and China Mobile are examples of this. But they also worry that as MVNOs go beyond resale, they start to capture additional value in certain lucrative niches, or worse, become an “abstraction layer”, aggregating and commoditising multiple underlying networks, facilitating arbitrage – especially by using eSIM or multi-IMSI approaches. Google Fi has raised eyebrows in this regard, and Apple has long been feared for wanting to create an MVNO/AppStore hybrid to resell network capacity.

That said, even simple MVNO operations are not that simple. Setting up billing systems, legal agreements, network integrations and other tasks is still complex for a non-telecoms firm like a retailer or sports/entertainment brand. A parallel ecosystem of specialised software vendors, systems-integrators and “MVNO platforms” has evolved, with subtly-different types of organisation called MVNA (mobile virtual network aggregator) and MVNE (mobile virtual network enabler) doing the technical heavy-lifting for brands or other marketing organisations to develop specialised – and often tiny – MVNOs.

What is uncertain is how much of this changes with 5G – either because of innate technical challenges of the new architecture, or because of parallel evolutions like network virtualisation. These could prove to be both enablers and inhibitors for different types of MVNO, as well as changing the competitive / cannibalisation dynamics for their host providers.

This briefing document describes the current state-of-play of the MVNO landscape, and the shifts in both business model and technology that are ongoing. It considers the different types of MVNO, and how they are likely to intersect with the new 5G world that is set to emerge over the next decade.

Contents:

• Executive Summary
• Introduction
• Why (and where) are MVNOs important?
• Different types of MVNO
• Full and “Thick” MVNOs, MVNEs and MVNAs
• MVNO opportunities: what changes with 5G?
• Consumer MVNOs – more of the same, just faster?
• The rise of enterprise, verticals and IoT – catalysed by 5G?
• MVNOs and network slicing
• 5G challenges for MVNOs: network and business
• Technology: It’s not just 5G New Radio
• 5G New Radio
• 5G New Core and network slicing
• Devices, 5G and MVNOs
• Other technology components
• What happened with 4G’s and MVNOs?
• VoLTE was a surprising obstacle for MVNOs
• Growing interest in full MVNO models
• 5G MVNOs: Business and regulatory issues
• Cannibalisation: The elephant in the room?
• Can MNOs’ wholesale departments handle 5G?
• Can MVNOs operate network slices?
• Regulatory impacts on MVNOs with 5G
• What do enterprises and IoT players want from 5G and MVNOs?
• Hybrid MNOs / MVNOs
• Conclusions 

Figures:

• Figure 1: Thick vs. thin MVNOs and resellers
• Figure 2: MVNO segments and examples
• Figure 3: 5G predicted timeline, 2018-2026
• Figure 4: 5G New Core network architecture
• Figure 5: Do MNOs need to reinvent the wholesale function?
• Figure 6: MVNO relationships are part of the future B2B/vertical service spectrum

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