Mobile virtual network operators (MVNOs) are sprouting up across the world, creating a parallel economy within the massive telecom industry. Even countries that had longstanding doubts about whether virtual operators would operate in harmony with their domestic telecom sector have now embraced the former. The most recent case in point is India, where the Telecom Commission has placed the stamp of approval on a long-pending proposal in March 2016. This will allow MVNOs to operate in India, the world’s second-largest telecom market. This means that virtual networks in India can now offer both voice and data services under independent brands even if they do not own spectrum or a mobile network.
Across the world, the imminent explosion of 5G services translates to good days ahead for the MVNO market. Transparency Market Research reckons that the global MVNO market will touch a value of US$75.25 bn worldwide by 2023. It stood at US$39.12 bn in 2014. TMR expects the MVNOs market to have a 7.4% CAGR between 2015 and 2023. There are several factors acting upon the growth of the MVNOs market. Let’s look at them briefly:
After Self-inflicted Period of Struggle, Global Mobile Virtual Network Operators Market Staggers to its Feet
The last decade was anything but memorable for mobile virtual network operators, who suffered hefty losses because of the excessive segmentation of the market. The ones who survived the washout were operators who maintained a focus on budget prepaid segments, such as TracFone, or those who were owned by large operators, such as Virgin Mobile.
The weak business models that MVNOs fell prey to were also so because of two factors: Carriers did not give MVNOs the required access to their networks and when that changed, the carriers charged MVNOs exorbitantly for network access and for megabytes.
But this has since changed with telecom carriers now selling talk time and bandwidth in wholesale to virtual network operators. This gives MVNOs far greater autonomy to sell these telecom services in attractive packages under a separate brand. This is a profitable arrangement for all parties because the telecom operators benefit from the economies of scale whereas MVNOs can craft their own packages for customers. The high number of MVNOs ensure that prices remain extremely appealing for customers.
New Developments Indicate Better Days Ahead for Mobile Virtual Network Operators
Enticed by the prospect of reaching out to a wider consumer base, several companies are now showing an interest in the mobile virtual network operator market. Messaging app, LINE, recently announced on its official blog that it will enter the MVNO space in Japan in the next few months. Google has already stepped into the MVNO space with Project Fi, which was launched in 2015. Likewise, in markets such as South Africa too, operators such as me&you mobile are helping the MVNOs market expand.