Second generation MVNOs are moving beyond discounting

Second generation MVNOs are moving beyond discounting

The MVNO market is changing rapidly, Telesperience’s Teresa Cottam looks at how the next generation of MVNOs are different to those who have gone before.

For a long time, the poster boys of the MVNO world were brand companies such as Tesco Mobile and Virgin Media – companies with a large parent who could exploit existing customer relationships, or for whom mobile was just an additional channel to a wider offer. Price competition and quad or quint play offers were the primary competitive weapons of these companies. They sought to compete head on with MNOs, replicating their business models but with a cheaper offer.

That first round of MVNO launch activity has now burnt out in Europe and North America – with the skeletons of high-profile failures still littering the market and the survivors stronger, more experienced and more focused. The corpses are being swept away though by a new round of MVNO trends, which demonstrate how the dynamics of the market have matured and are evolving. Second generation MVNOs are:

  • likely to come from a more diverse range of sources – while there are still opportunities for retailers and content firms, new industries such as banking and insurance are entering the fray
  • more likely to come from outside Europe
  • far more focused on specific customer niches, with more of an eye for understanding and exploiting them
  • launching with better funding and better business plans
  • looking at moving beyond basic telecoms products
  • looking at moving beyond traditional telecoms business models
  • internationalizing to grow scale
  • becoming more agile
  • becoming more technologically astute and harnessing new technology to create new business models and open up new niches.

New MVNOs in LATAM, Asia, the Middle East and Africa are able to learn from Europe’s mistakes in order to take advantage of new technologies, business models and approaches, leapfrogging Europe and reinventing what it means to be an MVNO to suit their local market. These regions represent unprecedented opportunities for the sector to expand – both from established sub-brands and MVNOs moving in, as well as from domestic start-ups.

In addition, the MVNO sector is growing its footprint beyond telecoms to better meet the needs of its customers – which means more skills are required in supply chain management and partnerships. As such, mobility can be seen as a channel rather than the end in itself.

Adding to this picture is the advent of companies that either blend mobile with other technologies (typically WiFi) to lower costs, or who utilize multiple networks to achieve better coverage or costs for their customers.


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These not only include disruptive start-ups, but also global disruptors such as Google. Google’s Project Fi, for example, is an experimental wireless service which seamlessly switches between networks and reliable public WiFi to deliver the best signal for calls and data. Customers only pay for the data they use each month, which is charged at a flat rate (no roaming charges). Project Fi also enables customer to order additional data-only SIMs which work from an existing account.

This enables a range of uses – say hello to family plans, back-up phones, and dedicated devices to create mobile hotspots charged on the same plan – while simplifying the billing and charging.

What this indicates is that the MVNO market trends of the Second Generation are not just being discounters but innovators – they are taking a fresh look at the mobility business and are willing to reinvent it for the benefit of both their subscribers and their own profitability.

Second generation MVNOs are moving beyond discounting