Why MVNOs are the Best Bet for Telecom’s Future?

The telecom industry is transitioning from provisioning essential enterprise services like intelligent routing and DID service to rich communication and hyper-connectivity, thanks to virtual network operations. Mobile Virtual Network Operators (MVNOs) are addressing the needs of specific market segments using their innovative and revolutionary B2C and B2B business models.

The new generation of MVNOs enabled by 5G, IoT, edge computing, and other advanced technologies can even tackle climate and environmental issues by developing connected and smarter infrastructure. The global MVNO market is estimated to reach $89 billion in 2024 from $64 billion in 2019, observing a CGAR of 6.8%.

Apart from adopting M2M communication and IoT in SMEs and large enterprises, the increase in integrated services contributes to this growth. For example, DID number providers integrate their direct inward dialing and inbound services with Unified Communications-as-a-Service platforms. Let’s look at what sets MNOs and MVNOs apart, various virtual network operational models, and their benefits.

The Difference Between MNOs and MVNOs

Below are some of the significant distinctions between MNOs and MVNOs:

  • MNOs operate independently on their frequency, while MVNOs need to buy or lease assets from MNOs to function.
  • MNOs buy network equipment and a government-licensed radio spectrum to set up their cellular or mobile network, while MVNOs act as resellers who make bulk purchases at wholesale prices.
  • MVNOs provide more differentiated and tailor-made services to specific segments than MNOs that offer more generic services to the masses.
  • Since MNOs primarily focus on building towers and maintaining networks, their services are likely to be expensive. While MVNOs can provide a better customer experience at a lower price.

Types and Operational Models of MVNOs

  • Branded Reseller

This MVNO venture only provides its brand name and distribution channels, while the MNO provides the rest of the business, from network access to service offerings. It is the fastest MVNO venture to implement since it requires the lowest investment. However, most business levers remain with MNO and network enablers, limiting the MVNO’s control over the business and value proposition of the services.

  • Full MVNO

In this MVNO venture, MNO only provides access to a part of the core network or the network infrastructure. The MVNO business provides the rest of the elements in the value chain. Telecom players that can synergize their new virtual network operations with their current business operations usually adopt the full MVNO model.

  • Light MVNO

It is a business model that can be placed between a branded reseller and a full MVNO. This MVNO venture controls sales, marketing, and distribution channels. Sometimes, they may extend control over value-added service definition and back-office processes.

  • Service Providers

The service provider MVNO model has no ownership over the infrastructure but gets to own customer care, billing platform, and SIM (Subscriber Identity Module). The venture can set prices independent of the prices set by the host network. They can brand independently under the reseller model or be co-branded as well. Their revenues come from outbound traffic, as they can own clients. On top of sales, distribution, and branding, it is also responsible for managing the wholesale rate structure and costs associated with IT platforms.

Defining Characteristics and Benefits of Virtual Network Operations Models

Following are some common characteristics and advantages of virtual network operation models that make for a successful MVNO.

  • Competitive Low Pricing

The differentiation from the established MNOs allows MVNOs to cut prices. For example, full MVNO models enable an independent charging structure and records, while an MVNO model with multiple MNO contracts can bring a different pricing level.

Enterprise customers can avail of robust connectivity at flexible pricing since MVNOs can use multiple networks from different operators. Besides, it opens up new revenue generation avenues, leading to higher margins and quicker return on investment.

  • Innovative and Focused Services for Niche Markets

New ventures can frequently launch innovative, context-based, and mission-critical services using the full MVNO model. These services mostly appeal to niche consumer segments like youth, military, early adopters of the latest technology, travelers, immigrants, and specific enterprise customers.

MVNOs can select suitable MNOs for their choice of end-users and adjust service packages to meet their demands. MVNOs can also customize plans and design special rules per user to enable specific service variations.

  • Tariff Flexibility and Bundling

MVNOs can re-package their services creatively to fit different interest groups. They can do so independent of MNOs by following the charging rules of 4G/5G policies. Besides, MVNOs can create bundles like triple and quad-play services to serve multi-terminal users.

It requires not just combined billing but also consistent chagrining and policy rules. These rules manage users’ service profiles for different terminals generated through user data integrated into the MVNO model. The ABC (Always Best Connected) MVNO model, an advanced case of multiple MNO models, can efficiently provide users with access to the best connection by automatically selecting the network.

  • Favorable Regulations and Reach

All MVNO models are based on standards and facilities that reduce risks and costs. The universal standard implementation of any model ensures compliance between MNO interfaces.

Besides, MVNOs help brands achieve good geographic coverage by delivering services to the users, wherever they are. This increased reach is made possible by contracting several MNOs directly instead of connecting via mobile network operators’ own interconnect agreements.

  • Promotions and Marketing

MVNOs can easily create marketing campaigns by introducing regional or time-limited variations in charging policies. In addition, every MVNO model has a policy server that alone could automate promotional campaigns.

MVNOs can facilitate temporary discount agreements with several MNOs to stimulate cross-sell and minimize churn. Since the hosting costs are low, inter-MNO competition drives the charges down. Businesses can redirect these savings toward retaining more customers.

Appeal to your Chosen Market Segment by Evaluating the Right MVNO Business Model

Although there is a growth in broadband data revenues, it cannot compensate for the drop in voice traffic. It has led to margin erosion in the telecom industry, pressuring the market to invest in innovative MVNO models. The flexibility and innovation in MVNO models allow entrepreneurs to launch ventures that provide advanced connectivity earlier than traditional mobile network operators. Virtual network operations bring operational excellence to new markets. They are a vital source of margin growth in the telecom industry.

BridgeVoice’s automated carrier platform offers premium features worldwide at competitive pay-per-minute rates, including DID service (Direct Inward Dialing and Inbound Service) and SIP Trunking.