In order to increase market share, MVNOs are turning to a wide range of business models and differentiators.
The recent re-emergence of MVNOs as a high-profile topic reflects a genuine trend in both subscriber growth and increasing service-level competition. Subscriber growth rates in both Asia–Pacific and USA/Canada have remained steady since 2002, while in Western Europe – the most mature of MVNO markets, representing nearly 60% of global MVNO subscribers – growth in subscriber numbers and percentage of market share has picked up since 2004 (Figure 1).
Figure 1: MVNO subscriber development (Source: WCIS, Analysys, 2006)
It could be argued that MVNOs have enjoyed success recently for two reasons. The first is favourable regulatory environments encouraging service-level competition, including 3G licence conditions encouraging wholesale capacity for MVNOs. The second is MVNOs’ successful execution of low-cost business models that MNO have been slow, or unable, to react to. However, despite these two factors, even in Western Europe the market share of MVNOs typically remains less than 10%.
In order to increase market share beyond this level, MVNOs are turning to a wide range of business models and differentiators (Figure 2). One trend is a recent spate of MVNO launches by high-profile, content- or community-driven new entrants such as Disney or ESPN. For their part, mobile operators (MNOs) have responded to the threat of MVNOs by hosting ‘own branded’ MVNOs (such as SIMYO, Yesss!, or Ay Yildiz), or buying MVNOs out (for example, TDC buying Telmore, or Elisa buying Saunalahti).
Figure 2: MVNO business models (Source: Analysys, 2006)
The future success of independent MVNOs depends on their ability to differentiate themselves in a sustainable manner in niches which are unattractive or difficult for mobile operators to operate in. For MNOs, the key challenge is to assess whether the ability of a particular MVNO to differentiate itself makes it an attractive target – either to host or to buy out.
Analysys Mason works with a range of MVNOs and MNOs on assessing the MVNO business opportunity. Please click here to download a brief overview of our capabilities and successes.