Mobile Virtual Network Operator Market Benefits from Increasing Demand for Value-added Telecommunication Services
Published On : Mar 11, 2016 | Category : Technology & Media
Mobile virtual network operator (MVNO) refers to an entity that resells wireless communication services utilizing the existing infrastructure of a third-party mobile network operator (MNO). The arrangement is a win-win for both MNOs and MVNOs; MNOs have extra bandwidths that they offload to MVNOs at wholesale prices, making a small profit in return, which would otherwise go unused. For MVNOs, they can render services at low retail prices as they do not have any infrastructure to build or maintain and do not have to bear charges for radiofrequency spectrum licenses. As such, MVNOs have low overhead costs, which allows them to spend aggressively on marketing, and apprise consumers about their services to convert into sales.
Administrative Support Benefits Europe MVNO Market
The global MVNO market is expected to reach a valuation of US$75.2 bn by 2023, expanding at a CAGR of 7.4% from 2015 to 2023. There are several reasons that are supporting the expansion of the MVNO market. First and foremost, MVNOs have the capacity to provide tailor-made services to consumers as per their needs, which is an advantage over obtaining services from MNOs. MVNOs receive dual support from governing bodies as well as MNOs, the former working in liaison with MVNOs to provide communication services on the domestic front at optimal charges.
Other than this, MVNOs receive support from MNOs as these network operators earn extra money through renting their infrastructure for services. This also helps MNOs register higher revenues for their excess bandwidth sold through MVNOs and gain competitive advantage over other network operators. For example, in European countries, government regulations mandate network operators to support MVNOs for leasing wireless capacity and for third-party sales of the radiofrequency spectrum available for use.
With the telecommunication spectrum increasing from 3G to 4G, MVNOs have the capacity to offer higher speed and value-added service to consumers. This results in improved service capabilities of network operators to segregate bandwidths and categorize services for specific needs. For example, due to segregation of services for optimal bandwidth utilization, rates for international calling have dropped considerably; thus, ethnic communities living in European countries can stay in touch with family and friends incurring low call charges. The radiofrequency spectrum not utilizable for data transfer is used for voice, which is economical for both service providers and consumers.
Full MVNO Dominates Market due to Distinct Benefits over Other MVNO Operational Models
The global MVNO market is divided on the basis of operational model, subscriber, type, and geography. By operational model, reseller MVNO, full MVNO, and service operator MVNO are the main segments of the global market; in 2014, full MVNO held the largest share of almost 61% in the global market due to the rising demand for value-added MVNO services. Full MVNOs offer accessibility to content and service applications that are essential elements of value-added service (VAS). Additionally, full MVNOs offer differentiator services, which is helping these services gain popularity and reap the benefits of higher gains.
By type, discount, migrant, business, media, telecom, M2M, retail, and roaming are the segments of the market. In 2014, discount was registered as the largest segment of the market; this is because consumers are trying to benefit from the low-cost calling services offered by discount MVNOs. However, migrant MVNOs are gaining traction due to customized services that are provided for ethnic communities that live away from their homelands. M2M holds immense promise in the MVNO market due to momentum in connectivity of several machines and devices.
Top players that operate in the global MVNO market are AT&T Inc., Sprint Corporation, Verizon Communication Inc., Telefonica S.A., Truphone Ltd., Lycamobile Group, T-Mobile AG, CITIC Telecom International Holdings Ltd., TracFone Wireless Inc., and Virgin Mobile.
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