Deloitte: MVNO Business Model an Opportunity for Telcos and Startups

As the digital communications market continues to evolve, forces large and small are giving rise to new business models or, in some cases, breathing new life into models from the past. One of these, explore by Deloitte in a recent “Flashpoint” article, is the mobile virtual network operator (MVNO) business model.

Evolving in parallel to the Internet of Things (IoT), Deloitte described ‘MVNO’ as an alternative wireless service provider that buys network capacity and connectivity from major carriers and resells services with value-added features marketed toward niche user bases. And, while MVNOs in the past were mostly business-to-consumer, they are now expanding into the business-to-business space.

It’s worth pointing out that this isn’t just an opportunity for stand-alone MVNO companies, but also a chance for incumbent carriers to branch out with side businesses, too. “Carriers can continue to serve existing clients while expanding into new geographies as MVNOs, to pursue new B2B opportunities without building new physical networks,” Deloitte noted in the article.

Likewise, IoT players can use MVNO capabilities to operate more efficiently, and corporations can operate as MVNOs as a way to improve operational efficiency and extend service and content delivery to customers

As in the traditional mobile telecom space, MVNOs face increasing pressure to focus on quality of experience (QoE), and not merely connectivity. Differentiation now means “specialization, vertical integration, data-driven capabilities, and the customer experience,” Deloitte explained.

In a similar vein, MVNOs must evolve their business models with an eye toward “moving data in a way that delivers new value for a customer—whether a business or an individual,” Deloitte said. This is in line with the vision of IoT, but using the MVNO model means anyone (not just traditional carriers) can get into the game.

This expanding opportunity means competition is heating up for MVNOs, and thus requires every player to have a well-defined strategy. In particular, a mobile/mobile app strategy, with organizations providing a service not yet available enjoying first-to-market advantage.

New MVNO players may have nimbleness and innovation as an advantage, but they also face the challenges of startups, as they have to build from scratch the necessary business infrastructure to support their operations—like billing and personal information security systems.

“Established carriers and legacy MVNOs will have the advantage, having fine-tuned their operations over the years,” Deloitte stressed. “Newcomers may discover that it’s not easy running a telecom business, especially if it shares little in common with your core competencies.”

Whether it’s a an organization looking to get into the MVNO space for the first time, or an incumbent carrier expanding its revenue streams, all these players must accomplish one primary goal: create value.

“Many will seek to innovate with data-driven solutions that deliver insights for triggering or driving decision-making. Such solutions can allow an automated system or an individual to act on the information and deliver a benefit seamlessly to the end user,” Deloitte concluded.

How do you see this dynamic playing out over the next few years? Drop a comment below.