Chinmay Mishra, Senior Product Marketing Manager at Optiva, outlines the opportunities and trends for mobile virtual network operators in Asia Pacific.
OPPORTUNITIES FOR OPERATORS
The global mobile virtual network operator (MVNO) market has increased from USD$36 billion in 2012 to more than USD$88 billion in 2022.
This rapid growth can be attributed to the number of strategic opportunities opening up in the market. The rising need for communication-based services, the pivot to remote working, the popularity of digital media, and the move to mobile wallets are just some of the trends driving these opportunities.
As the rollout of 5G continues and the economy becomes increasingly customer-centric, MVNOs have emerged as a way to better cater to subscriber needs, offering the kind of flexibility, scalability, and convenience that traditional mobile network operators (MNOs) lack.
However, such opportunities have a limited time window. In the scramble for subscribers, MVNOs must remain agile and adaptable in order to delight customers with competitive, targeted propositions that speak directly to their needs.
Analysing global MVNO trends offers a unique perspective of the realities facing the telecommunications (telecoms) industry, revealing which opportunities are worth pursuing and the efforts and resources involved in pursuing them.
The MVNO market is not only massive, but also very regional, with different parts of the world experiencing varying growth patterns and opportunities.
In 2023, the total MVNO market in Asia Pacific stood at USD$21 billion and is projected to grow to USD$39.3 billion at a compound annual growth rate (CAGR) of 9.3 percent.
Smartphone adoption is expected to grow from 76 percent in 2022 to 94 percent in 2030, with 5G dominating 55 percent of the technology mix by 2030. Mobile data traffic per smartphone is also expected to more than triple to 60 gigabytes (GB) per month by 2028.
Asia Pacific therefore shows some promising emerging trends for MVNOs, particularly in a greenfield environment.
ACCELERATING 5G ADOPTION
5G adoption is growing, but monetisation has been difficult because existing customers are not likely to pay extra for 5G vanilla connectivity on their smartphones, particularly in a cost-sensitive market like Asia Pacific.
In other words, 5G alone is not enough to entice new subscribers. This, however, provides a perfect opportunity for greenfield MVNOs.
5G might offer greater speeds, lower latency, and much higher capacity, but that alone doesn’t give subscribers much to get excited about.
Use cases that leverage the potential of this technology, such as extended reality, are needed to make the switch to a 5G-based MVNO more appealing. Asia Pacific already leads in 5G standalone deployments, with full rollouts already present in seven countries as of 2023. The networks are there; now the services are needed.
Fixed Wireless Access (FWA) is a method of providing wireless connectivity to a fixed location, such as a home or business, through radio signals rather than traditional wired connections like copper or fiber optic cables.
FWA is used in areas where building traditional infrastructure is impractical or cost-prohibitive. As of March 2023, 17 operators in eight Asia Pacific countries offer 5G FWA services. Markets where the fixed broadband technology mix is skewed towards xDSL, such as Australia, also see potential for 5G FWA.
- In 2023, Globe Philippines’ FWA accounted for 25 percent of home broadband revenue. It targets rural areas as well as urban areas where fiber broadband is not yet available.
- The REALLY DeWi network is powered by the people, bringing the sharing economy to the telecoms industry. The network is fuelled by strategically positioned cell site radios hosted on rooftops and balconies, making increased speeds and seamless roaming available to all customers on the network.
GOING BEYOND BUSINESS-TO-CONSUMER
With so much investment going into 5G and business-to-consumer (B2C) proving hard to monetise, business-to-business (B2B) is now taking centre stage as the growth driver for the industry. However, the B2B segment is not traditionally one of the main strengths of telcos, particularly in Asia Pacific.
A recent survey carried out by TMForum in Asia Pacific found that 41 percent of telecoms companies in the region get less than 10 percent of their total revenue from the B2B segment in contrast to the global average of 15 percent.
Telcos need to carefully cherry-pick the B2B use cases that will work for them. Developing this new segment will take time for telcos in Asia Pacific, and MVNOs are expected to ride on this opportunity.
5G standalone and private 5G propositions are resonating well within B2B. This represents low-hanging fruit for the industry, as this segment needs a very specific and streamlined business and sales model from the existing B2C segment.
The Internet of Things (IoT) also shows good prospects and is expected to grow. In fact, a recent TMForum survey found that 57 percent of telcos in Asia Pacific believe IoT to be the best-chance opportunity for growth.
- A GSMA report on private networks indicates that 16 percent of operators in Asia Pacific anticipate that private networks will contribute to over 20 percent of enterprise revenues by 2025.
- In Japan, local 5G licenses in the 4.7 and 28 gigahertz (GHz) frequency bands can be allocated by local governments to non-mobile operators seeking to deploy private 5G networks. Fuijitsu used the 4.7 GHz spectrum to deploy automated guided vehicles (AGVs) to transport goods around parts of its factory.
SERVING THE DIGITAL SAVVY SEGMENT
The average mobile traffic data per smartphone in Asia Pacific is higher than the global average and also is expected to grow threefold by 2028.
Asia Pacific demographics are also skewed towards the younger generation, who are digital and tech savvy. They expect digital touch points, and many of them are power users of the digital lifestyle.
This high-spending, loyal, and brand-conscious segment will always be an attraction for MVNOs. Markets where existing MNOs have little incentive to innovate or single brands cater to broad categories provide a perfect opportunity for digital-born MVNOs.
These MVNOs generally dictate high margins and get to profit quickly with a digital-only approach.
- A service called “by.U” by Telkomsel in Indonesia, which targets youth and digital-savvy customers with data-heavy bundles, is a good example of a digital-born brand. SIMs are delivered to a user’s home, recharges and top-ups are easy, and the onboarding process is 100 percent digital.
RISE OF NEW TECHNOLOGIES
The rise of new technologies is opening the door to new opportunities that may generate revenue or help build a business model that can be a competitive advantage for MVNOs.
Technologies like eSIMs, network function virtualisation (NFV), software defined networking (SDN), artificial intelligence (AI), generative AI (GenAI), blockchain, edge computing, and the Metaverse show strong potential.
Greenfield MVNOs can use these technologies to disrupt the capital-intensive telecoms industry. For example, blockchain can help build a distributed network system with smart contracts for easy onboarding.
GenAI can help personalise plans for every subscriber, whilst edge computing can be invaluable to governments and enterprises.
New technologies like the Metaverse are already doing well in advanced Asia Pacific telecoms markets like South Korea, Japan, and China.
FinTech is another area in which the region is excelling. However, MVNOs will have to become “techcos” rather than telcos to win this highly competitive market.
- SK Telecom launched a Metaverse app called “ifland” in July 2021. It was downloaded over 12 million times with a monthly average interactive time of 61 minutes, and received more than 2,000 partnership enquiries in just 18 months.
The dynamic landscape of the MVNO market in Asia Pacific, marked by the burgeoning adoption of 5G, innovative approaches in FWA, and the strategic shift towards B2B and digital-savvy segments, underscores a transformative shift.