Mobile operators will spend over $600 billion globally on 4G and 5G Capex through 2025, according to GSMA Intelligence’s The Mobile Economy 2022 report. There is a good chance they will spend just as much on the spectrum, judging by the $112 billion that U.S. operators alone shelled out for mid-band licenses in 2021.
To recoup those hefty investments, operators will need to get more creative and agile than they have ever been. For example, GSMA Intelligence predicts that by 2025, 30% of the global population still will not have a mobile subscription. It is not for lack of coverage. In many cases, the cost is a major barrier to adoption. Price sensitivity is also a top challenge in wringing more revenue out of the internet of things (IoT) market, which GSMA Intelligence says will grow from 15.1 billion connections in 2021 to 23.3 billion by 2025.
These challenges affect mobile virtual network operators (MVNOs), too. Although unburdened with the Capex and Opex of network ownership, they still need to keep their overhead low enough to build a profitable business in IoT, developing markets, and other price-sensitive sectors.
To make money in these challenging sectors, operators and MVNOs need to go beyond their traditional “minutes/bytes in bulk” wholesale business relationship. For example, many greenfield MVNOs do not have an existing retail footprint that they can use to start selling mobile, too. As a result, operators can upsell them on access to their distributors, dealers, and sales channels. This is a clear value add because it helps MVNOs get their business up and running faster and cheaper than if they had to build all of that from scratch.
Most greenfield MVNOs rarely have telecom experience. Take the example of a truck manufacturer that wants to launch an MVNO specializing in fleet telematics. It will not have the staff and infrastructure necessary to support provisioning, charging, catalogs, and other fundamental mobile operations. This need creates another revenue stream for operators, which can provide those services as a turnkey solution. Like the sales channel offering, this enables the MVNO to slash the time and expense of startup.
In a sense, MVNOs are like the consumer electronics (CE) vendors that increasingly want to embed 4G/5G connectivity in their VR headsets, tablets, and other devices - but lack the necessary mobile engineering expertise. Cellular module and antenna manufacturers are turning this into a major business opportunity by offering turnkey, easily integrated products that are pre-certified by dozens of mobile operators, thus freeing CE vendors from the time, expense, and hassle of that critical step.
One platform, many tenants
So why are more MVNOs and operators not pursuing this symbiotic relationship? A major reason is that most operators do not have a BSS flexible enough to support multiple brands, each with unique business requirements. Instead, a typical incumbent operator has a BSS that is rigid and complex because it has been cobbled together over the decades using components from multiple vendors.
For operators that are serious about pursuing the MVNO market, the first step is augmenting their hodge-podge legacy BSS with an MVNO-enabling (MVNE) platform: a modular, cloud-native, multi-tenant BSS that supports all of the functions that MVNOs need, including activation, provisioning and self-service options such as choosing and changing rate plans. This needs to be as close as possible to zero-touch because customer support and other manual processes can quickly eat up the profit margin on low-cost consumer and IoT plans.
An MVNE BSS also needs to be open enough to integrate with other MVNO systems. Take the example of a major supermarket chain that wants to launch an MVNO as another way to wring more revenue from each shopper and keep them in its ecosystem. Each prepaid top-up could earn reward points in its loyalty program. A mobile operator could enable those capabilities if its MVNE platform can integrate directly with the supermarket’s point-of-sale system. Then shoppers can top up at checkout as easy as buying bananas - a convenience that makes them less likely to churn to another MVNO or operator.
eSIM provisioning is another key requirement - even for MVNOs specializing in fixed IoT applications. One example is a provider of home security services that wants to ship motion sensors, doorbell cameras, and other devices directly to customers around the country - or multiple countries - for self-installation. This business model requires an MVNE platform that supports eSIM provisioning so when customers turn on their security devices for the first time, they are automatically connected to the right operator and provisioned with the right roaming service plan. This zero-touch approach also helps the security provider minimize its support costs, putting it in a better position to price its service competitively yet profitably.
Suppose a manufacturer of medical/fitness wearables wants to launch an MVNO. It may need the ability to provision thousands or tens of thousands of devices at a time after winning a contract with a major health care insurance provider. To support that, the manufacturer needs access to an MVNE platform with an intuitive management interface that can automate the process of onboarding and managing devices in large batches.
These kinds of capabilities are a tall order for many BSS vendors. One reason is that their platforms are inherently designed for a single operator. On the other hand, an MVNE BSS is designed to support multiple tenants — not only MVNOs but also the operator’s own digital sub-brands. It is also cloud-centric, with predefined features, giving it the combination of flexibility and capability that can bring a new MVNO to market in as little as 60 days. That means faster time to revenue - not only for MVNOs but also for operators looking for a quicker return on their enormous network and spectrum investments.
