Mobile virtual network operators (MVNO) have operated almost as long as the mobile industry itself, capitalizing on opportunities with differentiated service offers and brand positioning and niche markets.
While there are many MVNOs that have failed, some like Virgin Mobile and Tracfone (US) have prevailed in the consumer market and others like Kore Telematics are seeing robust growth in dedicated M2M MVNO service offers.
So where are the 4G LTE MVNO hotspots? Currently Australia, Japan, and the United States (US) top the list.
MNVOs around the world are progressively entering the 4G LTE market and in doing so they are generally seeking to capitalize on their brand or competitive pricing and packaging. Aside from low or lower pricing strategies other trends are also emerging as the 4G MVNO market segment takes shape, which are summarized in Table 1 below.
Table 1: Notable LTE MVNO initiatives
Source: Tolaga Research, April 2013
In Australia, Optus is hosting several MVNO’s on its 1800-MHz LTE network, including Virgin Mobile which is owned by Optus, and iiNet and Exetel which are both Internet Service Providers (ISP). The pricing plans adopted by Virgin, iiNet and Exetel parallel their 3G offers and capitalize on a variety of value propositions, including brand, service price and BYOD flexibility. Other ISPs in Australia including Boost and Amaysim have also indicated plans to complement their 3G-MVNO offers with LTE in the near future.
In Japan, Internet Initiative Japan (IIJ) and Japan Communications Inc. (JCI) have launched LTE-MVNO services using DoCoMo’s network. IIJ is building off its legacy to offer enterprise grade service capabilities, and JCI is capitalizing on premium pricing and BYOD capabilities. Route J Mobile (JCB) is using an MVNO relationship with eMobile to build on its Wimax service offer and Ratuken has also launched LTE on eMobile’s network.
In August 2012, Ting became the first MVNO in the US to provide 4G phone and data services using Sprint’s network. As a no-contract pre-paid operator, all Ting devices are not subsidized. Ting’s tiered plans are simple and, like ‘flex plans’ in Canada, there are no overage allowances. Instead, if a user exceeds a monthly data allowance then they will automatically be upgraded to the next tier of service.
Or, if they do not use their data allowance, they will automatically revert to the next lower tier of monthly service with plan charges adjusted accordingly. Ting’s plans are priced based on monthly call minute and messaging quotas along with data allowances. Ting is offering low data allowances relative to its competitors in the US, although its highest 3GB plan is in line with competitive offers on the market in terms of the data allowance. In addition, Ting’s 100MB 4G smartphone service is the lowest data plan available in the US, in terms of both the data cap and service price. Ting charges only $6.00 for devices added onto plans.
Sprint Affiliates Virgin and Boost are both offering 4G services in the US, as is CREDO Mobile. In Canada, Rogers owned FIDO launched its version of 4G MVNO plans in August 2012.
To date there has been scant 4G LTE MVNO activity in Europe. The exceptions here are Russia, where major MNOs are partnering with Yota (Scartel) to launch 4G MVNO services, and Poland where Cyfrowy Polsat was indeed the world’s first 4G MVNO launching its service in August 2011. In the United Kingdom, EE is also exploring plans to host MVNOs with Phones4U planning to launch 4G MVNO service with the MNO by the end of 2013.
LTE-MVNOs are lacking in the Middle East and Africa (MEA) although for different reasons than in Europe. LTE launches have been far more recent in MEA compared to Europe and MEA regulators often prohibit MVNO operations of any nature. On the other hand, interest in MVNO operations has recently sparked in Latin America, in part due to MVNO licensing processes initiated by regulators.
The presence of MVNO’s such as Virgin in the region, along with favorable regulatory conditions in many countries, suggest that 4G MVNOs will emerge in Latin America as more LTE networks are launched.
As LTE-MVNOs are launched they will drive innovation in pricing and packaging and market segmentation strategies. We expect that many of these innovations will be replicated by competing mobile network operators (MNO) and pressure MVNO’s to continue to innovate. For long term sustainability it is crucial that MVNOs focus on careful market segmentation strategies. In addition, we believe that digital services such as M2M, premium content, and mobile cloud services will drive MVNO activity outside of traditional mobile connectivity and communications.
Dianne Northfield is vice president of research and Phil Marshall, PhD is chief research officer at Tolaga Research. For more information, visit www.tolaga.com/