The MVNE market is crowded. Many firms – from large-scale vendors and system integrators to specialist and niche players – have entered the market to serve the needs of MNOs and MVNOs. The result is a fragmented and highly competitive environment. What does it take for an MVNE to stand out from the pack?

Mobile Virtual Network Enablers: Winning in an increasingly crowded market

By Hoong Kwan and Mike Greening

The MVNE market is becoming increasingly commoditized and competitive, with MVNEs under growing pressure to win new business. As the product offerings of MVNOs and MNOs evolve, so too must the propositions of MVNEs if they are to succeed. This viewpoint explores the challenges and opportunities for MVNEs seeking to differentiate and drive incremental revenues.

THE MVNE MARKET IS CROWDED

Today, MVNOs and MNOs are being served by a fragmented market of Mobile Virtual Network Enablers (MVNEs) ranging from large scale Global Vendors, System Integrators and a large number of small specialist providers and niche players.

Figure 1 provides an overview of MVNE segments and select players in the market.

Figure 1: MVNEs in the Market

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MVNEs provide services to both MVNOs and MNOs through a number of common engagement models including:

  • Providing MNOs with a standalone or integrated network / OSS / BSS stack to host sub-brands and MVNOs;
  • Providing MNOs with a robust platform to host a growing portfolio of MVNOs – this may include migrating all or part of the existing MVNO subscriber base to a standalone platform;
  • Enabling MVNOs seeking fast market entry through cloud based delivery models;
  • Providing MVNOs with a combination of network, OSS and BSS solution components, and value-added services to augment their propositions.

TRENDS IN THE MVNO SPACE AFFECTING THE MVNE MARKET 

The evolving needs of MVNOs present a wide range of opportunities for MVNEs, with MVNOs increasingly seeking a number of requirements: 

  1. Full control and flexibility in order to operate autonomously from the host MNO;
  2. Richer experiences and value-added services for more meaningful market differentiation;
  3. Capability to support bespoke customer acquisition and retention strategies;
  4. Flexible commercial models dependent on preference for OPEX vs. CAPEX

In response, MVNEs are extending their services beyond traditional OSS/BSS platform solutions such as the core OCS (Online Charging System), service fulfillment, network inventory management, service assurance, subscriber management and channel management to serve these needs.

Full Control and Flexibility in Order to Operate Autonomously from the MNO

As MVNOs seek full control and flexibility, we are seeing a number of platform related trends and developments in market. The most prominent are outlined below.

  • The Full MVNO model helps ensure flexibility and autonomy from the host MNO. Most MVNEs are now providing Core Network components to augment their OSS/BSS platform: services such as HLR/HSS, SMSC, GMSC, MME, IVR, GGSN and PCRF solutions. This autonomy also delivers additional negotiation power with respect to renewing commercial terms with MNOs
  • The deployment of 4G services by MVNOs is accelerating. Large increases in bandwidth and data traffic are trends that are likely to continue and will impact the services provided by MVNEs.
  • Policy management is increasingly important as MVNOs look to differentiate their service for specific niches through use of differentiated tariffing and zero-rating for certain sites such as Facebook.
  • MVNE services on cloud-based platforms is almost universally expected. Cloud- based platforms are reducing the time to market, increasing business flexibility and enabling opex based utility charging.
  • M2M/IoT markets continue to grow and M2M-focused MVNOs are looking to capitalise on this opportunity. Whilst this market still remains in its infancy, MVNEs are increasingly enhancing their platforms to serve the M2M/IoT markets.
  • Seamless roaming and competitive rates across multiple geographies enabling MVNOs to effectively serve the IoT market and outbound roaming market for business and consumer travellers.

Richer Experiences and Value Added Services for More Meaningful Market Differentiation

MVNEs are bringing value-added services and applications to market to support their MNO and MVNO customers to differentiate in their respective markets. Value-added services in an MVNE portfolio will help differentiation and avoid MVNE services becoming commoditised.

  • Data analytics capabilities are expanding in their sophistication and application. As more MVNOs move from basic reporting to business intelligence and predictive analytics, there is an opportunity for MVNEs to provide these services to support MVNOs across the customer lifecycle from acquisition to retention.
  • 4G speeds are enabling OTT Mobile VOIP and WebRTC services such as real-time Voice, Video, Messaging into VoIP, Web & Mobile Apps. There is an increasing need for MVNEs to provide integration of these services with their platforms.
  • Fraud and Revenue assurance is a capability that MVNEs may offer to MVNOs who are not looking to leverage specialised solutions or build as an in-house capability
  • Mobile Money, Mobile Wallet and payments are set to grow significantly together with remittances in emerging Some players are already launching their own mobile wallet and payment solutions. For MVNEs this offers a potential opportunity to differentiate or target MVNOs with aspirations in financial services or emerging markets.

Capability to Support Bespoke Customer Acquisition and Retention Strategies

In order to seek gains in market share, MNOs and MVNOs are deploying customer acquisition strategies that target specific segments as well as strategies to retain customers by increasing customer stickiness via loyalty plays. Three key trends are discussed below.

  • An increasing number of MNOs are launching one or more sub-brands. A sub-brand enables an MNO to target a niche customer segment separate to their main brand to test new market propositions, whilst preserving their primary brand MVNEs can potentially support MNOs with the launch and ongoing management of these sub-brands.
  • To combat tightening margins, differentiate services and create customer stickiness, some MVNOs are looking to non-telco revenue streams such as video on demand and content services to monetize their customer base. These opportunities require MVNEs to extend provisioning, billing and care capabilities to new services as well as potentially offering white label VAS as part of the
  • There are a broad range of MVNOs targeting BYOD and enterprise. MVNEs supporting this trend will need to augment their service to allow for features such as fleet data sharing, application deployment and device management.

WINNING IN THE MVNE MARKET

MVNE Proposition Elements

A MVNE’s proposition should enable an MNO or MVNO to address complexity and time of deployment, position itself to compete in market and improve its commercial outcomes. To deliver these benefits, there are nine key elements of a MVNE proposition ranging from consulting and project management at the start of an engagement, to core platform services, value-added services and service wrap. 

The nine proposition elements are shown in figure 2.

Figure 2: MVNE Proposition Elements

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The proposition elements represent levers in which an MVNE can meet the evolving needs of MVNOs and MNOs.

  • Platform elements of a proposition delivers MVNOs more control, flexibility and autonomy from the MNO, as well capabilities to support acquisition and retention strategies via the launch of sub brands and non-telco revenue streams.
  • Value added services offer benefits on two dimensions. Services such as WebRTC provide MVNOs an opportunity to deliver richer experiences to their customer base, while data analytics provide a platform for MVNEs to differentiate their services with actionable insights for MVNOs to optimize customer lifecycle management.
  • A compelling service wrap provides an opportunity for an MVNE to differentiate its proposition by providing services to an MVNO and MNO with superior SLAs and KPIs, assurance that deployment will be managed effectively with launch timeframes that are significantly compressed.

Proposition Weaknesses Observed in Market

There are a number of common weaknesses in MVNEs propositions that need to be overcome. These weaknesses range from missing hygiene factors to inadequate levels integration support, poor implementation planning and inadequate service wrap (KPIs / SLAs).

Figure 3 highlights key areas of weaknesses observed in market.

Figure 3: Examples of Weaknesses in MVNE Propositions

Weaknesses

Comments

 No full MVNO offering

With an increasing number of MVNOs seeking the full OSS/BSS/ network stack, not offering the network components as part of MVNE solution is likely to result in increased deployment costs, time to market and complexity for the customer as a multi-vendor approach will be required.

Lack of product integration

Speed to market and cost efficiency is critical for a new MVNO. Lack of product integration leads to an overall more expensive solution as the level of professional services required for integration, configuration and customization increases. Time to market also increases.

In-house development

In-house developed platforms increases risk with respect to the solution (e.g. not tested at scale). Best in class solutions provides a MVNO with assurance that the solution is stable, credible and reliable. In this case, a hybrid approach is usually preferable where critical components are from best in class vendors. However, integration of too many 3rd party vendors will be difficult to manage and risk roadmap development / evolution.

Fail to support key integrations

Within a solution, integration into social media channels and support for external systems from 3rd party vendors is critical for MVNOs to offer specific features and experiences to respond to demands of the market. Proprietary integration / no ability to disaggregate solution (modular approach) limits flexibility.

Limited experience / credibility

Credibility is critical in this market. Weak customer references and collateral has a detrimental impact on the sales process. MVNEs need to adopt a clear roadmap to inspire confidence and provide credibility in the business.

Credible implementation plan

Implementation is a key risk for a customer. There is a requirement for a credible implementation plan or MVNO on-boarding process that appropriately deals with the complexity of the situation. Proposed timeframes are often too ambitious particularly around migrating existing customers or integration into legacy systems, both of which ultimately lead to launch delays.

Service offering models too complex

Too many models and options can turn the procurement experience into a frustrating one; customers are looking for a well-defined product framework to streamline MVNO services, resources and pricing management. Conversely, pure cloud and OPEX based models may sometimes be too restrictive and less suitable for operators that do not want to pass control to a 3rd party.

 

Differentiating in Market Goes beyond Core Network

In order to compete in the market, MVNEs are differentiating beyond the core network, OSS and BSS components. MVNEs are differentiating on service wrap with superior SLAs to deliver greater speed to market, scalability and the ability to quickly turn on quickly new services. Several MVNEs are offering strategic pricing to address emerging market ARPUs, whilst others are starting to offer alternative commercial models such as a taking ownership interest in MVNO customers.

As an example, high levels of virtualisation, pre-integration of solutions and robust planning and deployment frameworks enable MVNOs to reduce the time-to-market to several months from the point of contract sign-off. Removing the need to partition an existing MNO’s platform with an “off the shelf” product removes the need for complex integration and migration of customers.

MVNEs can also deploy differentiation strategies aimed at delivering value-added services which enable enhanced experience for the MNO/MVNO and subsequently their customers. Some areas of differentiation may include data analytics modules, integration with social media, simplified/augmented platforms for emerging markets and global connectivity. What is clear is that there is no universal approach in the market, with MVNEs pursuing a range of strategies for differentiation.

Figure 4 illustrates how the approach to differentiation varies by MVNE.

Figure 4: Examples of Differentiation in Market beyond Network, OSS and BSS

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CONCLUSION

The MVNE market is crowded and competition is intense in an industry where margins and value are already under immense pressure.

In order to differentiate, MVNEs should align portfolios and development roadmaps to respond to the changing needs of MNOs and MVNOs. Key areas of opportunity include reducing the time to market, increasing value added services and more generally allowing business to be conducted simply, efficiently and more cost effectively. Additionally, we will see MVNEs continue to expand internationally as they seek to capture new MVNO opportunities in LATAM, Africa, Asia and Middle East.<>

 

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Over the last three decades, Cartesian has worked on over 50 MVNO-related projects throughout the US, Europe, Middle East and Asia.

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