The growing MVNO world
International telecommunications research company OVUM reports on the global trends affecting Mobile Virtual Network Operators. Part 2 of the series looks at the global trends which will shape our local mobile market.
It is a good time to be an MVNO. We predict total global MVNO subscriptions to reach 250,000,000 by 2021, over four per cent of the total mobile market. The sector is growing at nearly nine per cent per year, over 3.5 times the speed of the traditional mobile network operators. While Western Europe and the US continue to represent the bulk of the MVNO market, it will be Asia that drives growth in the market. The region will add more than 600 million new mobile users by 2020 - India alone will add 250 million users by the end of the decade.
Compared to these numbers, the growth of the Australian MVNO sector is modest. We expect MVNO subscriptions to make up a little over 10 per cent of the market by 2021, up from nine per cent in 2015. In global terms, the Australian market is very mature, with well-established MVNOs covering segments from general mobile services to customer niches.
While Australia is a developed, mature market, the global industry is undergoing an evolution that is already starting to affect local mobile operators. Currently, MVNOs exist mostly in the retail sector: retail, however, is becoming more complex and interdependent, with the market structures of telecoms changing rapidly. In the long term, we won’t see single business fixed or mobile operators.
From both supply and demand side, telecoms, media, online and IT are merging together. Customers are accustomed to the idea they can purchase a variety of digital services from their telecoms providers, but also access services from ‘non-traditional telcos’. This is affecting the industry in a number of ways.
First, customers are not inherently loyal to traditional network operators for mobile services. In the US for example, 56 per cent of respondents to our survey chose ‘any other trustworthy organisation’ when asked who they would trust the most to provide mobile services. MVNO brands clearly have a legitimate role to play in the market, as customers become more sophisticated in searching for providers that better suit them.
Second, content partnerships are increasingly important as operators seek to add value. In Germany, Drillisch offers music streaming service memberships, while Virgin Mobile leverages its wider group to offer access to Virgin Media. The trend is already apparent in Australia, with two of the major mobile network operators providing live sport coverage to customers. Mobile-only MVNOs need to see their business expanding in different segments and offerings if they are to compete effectively.
Third, the perception that MVNOs can differentiate themselves using only price - particularly by undercutting the major network operators - is no longer true. Our research in four highly developed countries – the US, the UK, Germany and Spain - shows that only small minorities of customers are primarily price-led. Customers want more than a basic service - they want personalised, targeted services.
Therein lies the MVNO’s advantage. The typical MVNO customer base is a very defined audience, one that the operator knows well. Whether an operator targets a youth segment, a particular ethnic group, or the customers of a retail chain, their end-users have specific shared interests and requirements. MVNOs can use their knowledge to shape a suite of product and service innovations that appeal directly to their needs and interests.
Consistently meeting and surpassing their customers’ expectations in meeting these needs will power operators’ growth as the industry comes to terms with the next phase of its evolution.