April 4, 2019

5G is Set to Significantly Disrupt the MVNO and Wireless Wholesale Markets

Specialized MVNOs that target niche markets may emerge as operators evolve and master 5G network slicing.

The model for the mobile virtual network operator (MVNO) has been relatively consistent since its conception in the 1990s when the liberalization of regulatory frameworks first made it possible for a third-party company to buy wholesale bulk access to 2G networks. Since then, the added data element has made mobile broadband a large cash cow for MVNOs, even though the connectivity proposition is still basically the same.

The European MVNO market is the largest and most mature globally. With mobile penetration in the region surpassing 100%, limited vertical growth means that the market is highly competitive. After nearly a decade of this intense competitive pressure, average revenue per user (ARPU) has fallen significantly, forcing MVNOs to look for new revenue opportunities.

5G will introduce a new wave of specialist, mini-MVNOs.

With the advent of 5G networks, the ability to provide network slices across virtualized network infrastructure means that the MVNO model will potentially change dramatically in the 2020s. Essentially, unprecedented amounts of control can be given to the MVNO and the previously high barriers to market entry can be lowered. This will introduce a new wave of specialist, mini-MVNOs. For example, niche MVNOs that can provide network slices with pre-defined characteristics, such as high bandwidth and low latency, for target markets like mobile gaming or HD video conferencing.

Lowered Market Entry Barriers Enable New Service Provider Breeds

At the service level, the next generation of MVNOs will be able to target specific verticals with bundled services that very closely match their needs for connectivity, cloud services, AI/big data solutions, self-service enterprise solutions, IoT or any other offerings. If regulators ensure that the MNVOs have access to full-feature 5G connectivity services, it could mean that we will see interest from established media companies that currently have no business in the telecom space. If mobile network operators do see 5G as a catalyst for more MVNO wholesale business, rather than a competitive threat, deploying sliced mini-networks for non-telco service providers could open up a whole new line of business.

For example, a company like Netflix may want to boost the mobile element of its multiscreen IP video service capabilities. Under this model, the company could achieve this by itself in an MVNO model and also provide telephony and messaging services. This type of play becomes possible under 5G, as the barriers to market entry are lowered and the RAN connectivity becomes hugely customizable to fit usage type.

E2E Management and Orchestration Challenges

Not all of the current MVNOs were created equal. Some resellers, which are described as “thick” MVNOs, operate their own core network and BSS/OSS stacks, relying only on a mobile network operator for the radio access portion (as opposed to “thin” MVNOs which run sales, marketing and charging/billing and has no direct operational involvement). A good example of a thick virtual operator is Virgin Mobile in the U.K., which was recognized as the world’s first genuine commercial MVNO. These companies are essentially network owners in their own right. In a 5G world, they must have the necessary operational framework for managing and orchestrating a network slice.

These operators must also then ensure that these frameworks are 100% interoperable with their radio access provider, so the network slice management and orchestration can be maintained out to the mobile endpoints. This is, of course, where standards and open systems architectures should come into play, coupled with a close engineering relationship between the two entities.

Getting the orchestration hierarchy correct across the networks of two or more operators in this way is absolutely critical to providing next-gen MVNO services in a sliced 5G model. If it can be done cost-effectively, it could open expose a whole new revenue stream in the digital economy that was previously unreachable. The technological challenges are clearly surmountable if the regulatory and competitive landscapes allow these powerful 5G features to be accessed by MVNOs.

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