By any metric, the last few years have been exceptional ones for MVNOs. Impressive gains have been made in emerging and developing regions; and growth has been solidified in mature markets. For context: connection growth for personal mobile services grew 4.5 percent per year globally. Meanwhile, MVNO connections (on their own) increased at a staggering 18 percent per year, making MVNO connection growth more than four times faster than the mobile industry average.
Buoyed by these impressive connection numbers, MVNOs have seen their share of the global mobile industry continue to rise. In some mature markets, MVNOs now command as much as 10 to 15 percent of the mobile subscriber base. Moreover, MVNOs and sub-brands operated by MNOs have gained shares as high as 30 percent of subscriptions. Moreover, MVNO short-term growth projections are of more than seven percent per annum.
Taken together, these statistics more than suggest that the MVNO business model is thriving at a macro level. New MVNOs are cropping up, seeking to serve niche markets. The MVNO space provides such a clear business opportunity that key disruptors have entered the market, as a result of lowering technical barriers to entry.
For established MVNOs, however, this can prove a serious problem. Disruptive agents can be big brands – device companies, technology giants, even media titans – who are launching their own global mobile sub-brands, which promise out-of-the-box connectivity and global coverage. More often than not, the parent brand is attempting to build global solutions for tablets, laptops, smartphones, even IoT devices, which require small-form SIM cards and low-cost global data rates. These new MVNOs bring their parent brand’s brand power into the MVNO market.
With new pressure from big brands and constant pressure from small-scale disruptors, what can established MVNOs do, especially when brand and distribution capabilities are the difference between success and failure? MVNOs need to get strategic. And here’s how:
- Broaden their addressable market. MVNOs need to focus on expanding into adjacent service markets and new market sub-segments. MVNOs can no longer afford to focus solely on low-end, low-ARPU customers. MVNOs should consider offering more customized services to a greater variety of niche sub-segments, including the under-serviced enterprise segment, where there’s clear demand for integrated business mobility.
- Expand their value proposition. MVNOs must constantly add innovative products and service bundles to their offerings. Today’s subscriber isn’t just looking for a winning price; they’re looking for a winning service bundle that satisfies most of their mobility needs. By expanding and deepening services and devices offered, MVNOs can win over a broader, general consumer market.
- Establish deep partnerships with MNOs. Often, when they aren’t creating or buying new sub-brands, MNOs are seeking MVNOs out as partners, in order to reach niche segments that MNOs find difficult to reach on their own. An MNO’s successful MVNO strategy often depends on facilitating deep partnerships with MVNOs, not just selling excess capacity to MVNOs. MVNOs should take advantage of forward-thinking MNOs.
That being said, successful MVNOs need to develop strong brands of their own to stand out from the pack. Especially for MVNOs lacking an edge in distribution, branding is absolutely essential. MVNOs have to guarantee their customers a completely on-brand experience to ensure “ownership,” building relationships, understanding customer location and spending patterns, enhancing customer experience, leveraging direct marketing to provide relevant offers and using data to strengthen overall value.
Due to the association of value they’ve already cultivated, big brands have an innate advantage when they enter the MVNO space, which explains why grocery retailers with strong reputations for value have made successful leaps into the mobile market. Nevertheless, established MVNOs can still compete and thrive.