October 12, 2020
The size of the mobility market has been upscaled many times over the last few years and is now predicted to grow to over $30bn a year by 2025. Expansion into new, developing markets and increased levels of mobile device ownership only account for a small percentage growth, what’s really driving the growth is the global demand for IoT (Internet of Things).
IoT is changing industries, making things smarter and more intelligent and is already delivering greater efficiency across a variety of sectors. Coming up fast on the horizon is the promise of 5G which is accelerating this rapid change.
It’s an exciting time for Mobile Virtual Network Operators (MVNOs). A mobile virtual network operator is a wireless communications services provider that does not own the wireless network infrastructure over which it provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets r An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. An MVNO usually has its own customer service, billing support systems, marketing, and sales personnel. Increasingly MVNOs are playing an important part in the market and this is reflected in their market share.
5G goes far beyond smartphones and for MVNOs this represents a fantastic growth opportunity. Developments such as massive IoT, V2X smart factories and fixed wireless access means 5G will revolutionise smart cities and connections. Increasing wireless capacity 1000x, connecting 7 billion people and 7 trillion things, saving huge amounts of energy and delivering low latency connections. The IoT market will still be massive for traditional operators, but as the number of devices grows, the average revenue per connected device is expected to fall.
By 2025 IoT revenue is expected to reach $1.1tn. The majority of IoT revenue will come from application platforms and services while connectivity is important, its relative share of revenue will decline over time. On the face of it this wouldn’t seem like a great opportunity for MVNOs but actually the IoT market is growing so much, this will lead to development of smaller and nimbler MVNOs which will emerge to take advantage of new niches in particular verticals.
The exponential growth of IoT/M2M will be a proxy for the rapid growth of MVNOs. If we look at typical IoT and 5G deployment scenarios, it’s all about services and applications. Massive machine type communications such as U-health and Wearables, ultra-low latency and ultra-reliability are driving smart vehicles and industrial automation whilst enhanced mobile broadband delivers mobile cloud computing and UHD streaming on demand.
5G will also enable network slicing which will enable virtualisation of the core network, opening up private industry vertical opportunities such as intelligent surveillance, video analytics, Enterprise PTT and Industry IoT. MVNOs are well positioned to take advantage of this develop new market opportunity. It’s expected that industry specific MVNOs will emerge to provision and manage their massive volume IoT and M2M solutions. Traditional MNO’s will simply not be able to deal with so many different niche verticals and the unique demands that each one will provide.
It’s clear that this is an exciting time for MVNOs and the telecommunications industry in general. There will be big changes, there will be more niche providers and much of this development will need to be supported by traditional MNOs and service providers, helping to develop the tools and provide the automation and services required by the market.
Craig Price, SVP Mobility Products and Marketing at PCCW Global spoke at the recent MVNO World Congress.