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short-termist, because it puts pressure on the industry. It’s different when it comes from a deliberate commercial structure: We work well with Lebara, and Lebara markets towards certain ethnic groups.’ This is the case across the board: MVNOs are seen by operators as a route to addressing certain market segments. ‘The network’s own view of how well they can access different market segments will influence how supportive or not they are of MVNOs,’ says Davis. After all, MVNOs that ‘just re-badge standard mobile services’ provide little additional choice, Davis says. ’MVNOs can only provide real choice when they have the capability to deliver a different product or service.’ Increasing the role of MVNOs in the UK could therefore pose a challenge. The MVNOs themselves realise it is a difficult market, with some comparing the current landscape to a cartel. The People’s Operator – an ethical MVNO that has the likes of Wikipedia founder Jimmy Wales working on its platform – is ‘totally independent’, says the company’s founder Mark Epstein. He says the US market is far more lucrative than the UK, partly due to higher ARPU. ‘The UK is dominated by mobile operators or MVNOs owned by them – such as GiffGaff, or iD Mobile run by Carphone. These can keep players such as us out of the market. With this in mind, Epstein says the UK market has been degrading over the past few years. ‘You have to have enough margin to cover your cost, and margins in purely mobile are reduced,’ he explains.

Regulation There is no regulation around the MVNO market and this could stifle new entrants further. Epstein thinks the regulator needs to intervene for the market to be able to truly thrive. ‘It is important to have the ability for new players to set up and to

achieve true product innovation. I do think this comes from intervention from government. ‘When networks feel it’s in their interest – when they are being looked at in the case of mergers – they are stimulating competition and it’s very cartel-like now. There is no mandate to even provide competitive wholesale terms in the UK,’ he adds. At the same time, an innovative offering is important to enable an MVNO to thrive. One such offering comes from FreedomPop, an MVNO giving away texts, minutes and data for free for light users. In addition, new players such as Google could disrupt the market in the future. There is also space for more niche MVNOs, says Shanks Kulam, co-founder of x-Mobility, the MVNA for Three. He cites the example of the green utility Ecotricity, which recently launched its MVNO Ecotalk. ‘It has launched the first carbonneutral MVNO. Its customer base is comprised of 100,000 plus people who care about green. Even if it just transfers 25% of those, it’s a sustainable niche. The MVNO market still has potential to grow, if only slightly, and players such as Sky that are able to offer mobile as part of a broader offering will also win. But unless operators change their policies, the smaller players will still be held back by the networks. ‘To nurture and protect healthy competition in the mobile market, we need to make life much easier for MVNOs,’ Bhikha says. For example, he says, this could include ensuring that all challenger brands ‘are able to offer 4G to their customers as standard’. Therefore, the role of MVNOs can be increased if they become closer to operator partners, at the same time using their own assets and infrastructure, says Mann. Yet he adds: ‘Whether they can do that remains to be seen.’

The future for MVNOs Internet of things (IoT) networking is bringing new opportunities for specialist MVNOs, as is the arrival of eSim technology that can allow ‘remote provisioning’ of SIM cards, says Dean Bubley, director, Disruptive Analysis. ‘Mobile operators are conscious that they cannot always address complex verticals such as cars, which often travel across borders and need customised connectivity and management. ‘While some are developing their own IoT platforms, a broad array of device-centric specialists are looking at bundling the connectivity with additional management, control and analytics functions – and they take on MVNOs as part of their portfolio.’ Further down the line, the definition of an ‘MVNO’ may change still further, he predicts: ‘As the industry moves towards 5G and also core-network virtualisation (NFV), there are many new

variations on the sector that become possible. In the future, an MVNO may have specific network capabilities, rather than just simple capacity resale, he adds. This could be based on performance or enhanced security measures, for example. In addition, the long-term vision for ‘network-slicing’ to be enabled by 5G could create a chance for ‘slice operators’, Bubley suggests. On the radio side, the development of LTE in unlicensed spectrum, and especially MuLTEfire technology, might allow venue owners to run their own 4G networks as ‘neutral hosts’ – with the mobile operators acting as MVNOs onsite. ‘In other cases, it could mean that enterprises become their own MVNOs, with roaming relationships for users moving beyond their premises. ‘Other advances around spectrum sharing, or liberalisation of mobile network codes also help to blur the line between network operator and MVNO.’

The rise of the connected car offers new opportunities for specialist MVNOs.

December 2016


Mobile December 2016  
Mobile December 2016