Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece, Michael Hunt, Director at Mobile Technology Consulting and a telecoms professional with over 25 years in the industry, sat down with the MVNOs Series to discuss all things 5G.
MVNOS: How can MVNOs position themselves now to take advantage of 5G?
Hunt: Whilst I think it is going to take a few years for the real effects of 5G to become apparent, MVNOs need to be mindful of the future and what is coming to ensure they don’t get blindsided. Right now the MVNOs need to make sure they get immediate access to the 5G networks, and on non-discriminatory terms. Currently the handset availability and the 5G coverage are such that in a practical sense I don’t think it matters, although from a market messaging perspective it does.
Pricing levels and structures also need to be kept an eye on. As data volumes increase, MVNOs need to make sure they have the capability to re-negotiate their rates (and structures) when appropriate – whilst it is great if this is written into a contract, in reality building the right pragmatic relationship with the MNO is more important here. In addition, I think that mobile will eventually move to a model where subscribers pay different amounts based on maximum speeds rather than on data volumes, as has happened in the fixed world. MVNOs need to watch for this, as if the market moves to speed based pricing, they don’t want to be left behind.
Ultimately MVNOs need to continue to excel at distribution and service differentiation at a competitive price to continue to be successful.
Will we see the emergence of new target segments or deeper penetration of existing segments?
I think it will be a combination of the two. MVNOs with good distribution channels and customer care will continue to succeed, but I do believe that we will start to see more business MVNOs, with a particular growth in fixed-mobile converged services. We have now reached a point where cloud based telephony platforms are becoming more accepted by businesses (replacing physical PBXs) and these cloud based platforms enable the call routing and control required to make FMC MVNOs a reality. This is still a niche market, but I do see it growing over the next few years. The increased level of home working brought on by COVID-19 is only likely to accelerate this trend.
Aside from the business market, I think there will continue to be growth for the mass market MVNOs with good distribution and marketing reach, as well as the number of small niche MVNOs coming to market.
What 5G use-cases hold the most promise for wholesale?
To answer this, you need to look at what 5G actually brings, and compare it to the value that MVNOs bring. At a high level, 5G brings increased data speeds, increased capacity (connections and throughput per unit area) and lower latency, whist MVNOs bring distribution expertise and can offer a differentiated service (technology or service based). In terms of data speed, I have yet to see many applications that need more than 4G speeds yet (even Netflix UHD only needs 25 megabits per second), and in a similar way to the increased capacity it is something that is available for everyone with access to the 5G network. The lower latency will in due course enable new services, but it should be remembered that the speed of light is not infinite, so latency will not be as low as touted for 5G until all content is local.
In addition, and this is still a few years off, network slicing will provide the capability for the MNOs to slice their networks and therefore provide differentiated levels of quality of service for MVNOs and/or other users. Whilst this is definitely of benefit to MVNOs if they get enhanced service quality for their specific proposition compared to the standard market, my view is that the main beneficiaries of this will be the MNOs, who will be able to price services differently for different levels of quality therefore keeping more of the service value for themselves.
How does IoT fall into this, especially with the industrial automation applications and automotive applications?
IoT will continue to grow and in terms of number of connections will likely provide the majority of growth in mature MVNO markets. However, the real monetary value in IoT has always been the selling of the services that sit on top of the connectivity rather than the connectivity itself. There is also a disconnect in the IoT market between what is paid for in terms of data usage and the perceived value to the customer. High data video is often low value, whereas low data SMS can deliver high value.
In terms of the 5G functionality, in due course, I think the additional density of 5G, the reduced latency and the ability of network slicing to enhance quality of service may have a positive impact, although I think this benefit is some way off.
Will 5G solve the “notspot” issue for consumers in remote areas?
I don’t believe it will. The “notspot” problem will be solved by building out new base station sites which can operate over 3G/4G or 5G, and may be shared by the MNOs. Only 5G at the lower frequencies are likely to help solve the problem, as at the higher frequencies there are range and potential line of site issues. 5G provides more capacity per unit of area rather than enhanced coverage.
You are set to speak at MVNOs World Congress 2020 in Berlin in September. What excites you most about the event? Why are you attending?
The MVNO World Congress is always the premier event of the MVNO calendar, and is a great place to catch up on the latest trends in the MVNO market as well as learn about some of the new technologies and their impact in real life scenarios (5G, eSIM etc). I am running an MVNO 101 workshop on the first day, which hopefully will help prospective MVNOs learn more about the process of setting up as an MVNO as well as some of the pitfalls to avoid, as well as moderating a panel on 5G: Friend or Foe for the MVNO. It’s always enlightening seeing the different perspectives from the various countries, and how the behaviours of the MNOs and the regulators differ, and the impact that has on the MVNO markets. What you hope for is examples of new MVNOs, technologies or ideas which make you go “why didn’t I think of that!”
In exciting news, Michael Hunt will be speaking at MVNOs World Congress 2020 in September in Berlin. Find out more here.