History of the MVNO market

History of the MVNO market

The MVNO market kicked off way back in 1990-91, when a number of players rented capacity on the networks of existing MNOs. The very first MVNOs copied almost everything from MNOs – establishing shops, subsidising terminals and then marketing themselves as operator number 3, 4 or 5 in their local market.

Like in other industries, the MVNO market has undergone evolutionary change. This process can be divided into 5 phases:

5 - PHASES (click to see)

In most places, this evolution has now reached the stage where the dominant players in the market are discount MVNOs or entities run by large retailers.

The older MVNOs have found themselves under enormous pressure to consolidate.

The precise way that evolution takes place differs from market to market. But one thing is certain – every market goes though all 5 phases.

To succeed as an MVNO, it’s important to get to understand the market’s overall direction, while recognising that success is not simply about the margin you make from your supplier on voice and data services.

MVNO evolution

When you’ve analysed the MVNO market as extensively as we have, you discover there are 2 types of MVNOs:

Those that succeed and go on to establish a large and healthy business
Those that become part of the industry’s consolidation

History shows the MVNO market is cyclical. First, MVNOs show up in waves; after some time, consolidation takes place and larger players are created; these then merge with, or are purchased by, one or more of the MNOs in the marketplace. This story repeats itself again and again and again…

In the first phase, the MVNO market was dominated by players with a very similar strategy to the existing operators. They built up large organisations and distribution networks, subsidised terminals and acted more or less like the operators that they competed against.

In the second phase, discount/no frills MVNOs entered the marketplace, betting on a SIM-only concept and using the internet as their distribution channel. Then large retailers came on board, with the big supermarket chains as their poster boys. These entities exploited the large traffic that came through their stores to sell their customers prepaid products.

However, the future will see the entry of a range of new players differing from the MVNOs that we know today. We’ll see players who base their offering around, for instance, distribution, media, VAS or technology. Simply put, the future will be all about adding value to the market and creating exciting solutions that combine the products you already sell with the new possibilities offered by the mobile universe.

Players able to attract customers while generating traffic at the lowest cost – and more effectively than an MNO – have a chance in the MVNO market of the future. The rest will die.

Discount MVNOs

A lot has been said about so-called discount or no-frills MVNOs, although few have spent the time and energy to analyse the phenomenon begun in Denmark by Telmore and CBB Mobil.

With a SIM-only strategy and utilising the internet as the key distribution channel, these players created a new concept that has transformed the mobile industry as much discount airlines revolutionised the airline industry.

In just a few years, Telmore and CBB Mobil had managed to gain 20% market share in Denmark – a success was born.

Strand Consult was the first to analyse this phenomena in a report LINK that has been used by many operators to gain insights into the discount/no-frills MVNO market.

We were not surprised that our report quickly became a ‘bible’ for players focused on this market – a detailed strategic portrait, after all, is vital in a fiercely competitive environment such as this.

Strand Consult’s detailed knowledge of the MVNO market is unsurpassed. We guarantee that no one else’s expertise compares with ours. The predictions we made about the market back in 2003 – which our CEO John Strand also presented to the 3GSM Congress in Cannes 2005 – have now become reality in a number of countries, with more set to follow.

Read and hear John’s 3GSM presentation here LINK

Or order the report and see for yourself LINK