Virgin Media enters the 5G fight with Vodafone MVNO switch

Virgin Media has announced it will move its MVNO wholesale agreement from BT Enterprise to Vodafone, as the 5G engines start to rev.

Although the agreement with BT Enterprise does not expire until 2021, Virgin Media has said it will launch 5G services on Vodafone’s network ahead of this time. Virgin Media Business has also signed a wholesale agreement with Vodafone relating to the supply of various network services.

“This agreement with Vodafone will bring a host of fantastic benefits and experiences to our customers, including 5G services in the near future,” said Lutz Schüler, Virgin Media CEO.

“Twenty years ago, Virgin Mobile became the world’s first virtual operator and this new agreement builds on that heritage. It will open up a whole new world of opportunity for Virgin Media as we focus on becoming the most recommended brand for customers and bring our mobile and broadband connectivity closer together in one package for one price.”

While customer bundling has always been a prominent strategy for the Virgin Media business to increase customer loyalty, the mobile side has never genuinely attracted much interest in a UK market where MVNOs have traditionally played second fiddle. Pricing and bundling options have not been revealed as of yet, though with a prominent broadband business sitting alongside a refreshed content proposition, perhaps the Vodafone network might be the missing piece of the puzzle for mobile.

“We are delighted that Virgin has recognised the huge investments we’ve made, and continue to make, in building the UK’s best mobile network and our role in challenging the market with new commercial services,” said Nick Jeffery, Vodafone UK CEO. “As a result, they have chosen us to work with them in the next phase of their development.”

As it stands, Virgin Media currently has 5.6 million broadband subscribers, a 21% market share of the UK’s 26.6 million broadband connections. Project Lightning, Virgin Media’s fibre expansion initiative, will eventually pass 17 million residences, while ARPU for the broadband services has increased 0.5% to £45.39 for H1 2019. Prices are also set to rise by 4.9% on average for the remainder of the year to further grow ARPU.

Alongside the progress being made in broadband, the team has also refreshed its TV proposition. This was a pale imitation of content in bygone years, though partnerships with Sky, BT and Amazon Prime for football content could lead the TV services into the land of relevance.

This is a very healthy position to be in, however the share of mobile is much less attractive when you take into consideration how long the brand has been around. With 3.1 million mobile customers, Virgin Media’s MVNO only commands market share of 3.6%. This is the missing piece of the puzzle.

Mobile certainly presents an opportunity for Virgin Media to drive revenues forward, though the 5G world is becoming increasing congested. Alongside the four MNOs, Sky also plans to launch 5G services and we suspect there will be more in the pipeline. In a market with just over 84 million subscriptions to fight for, there will be a lot of choice.

Being a MVNO is not necessarily a perfect situation, though Virgin Media is in a good position. The convergence trend, bundling together services into a single bill, is a proven strategy to decrease customer churn and increase both ARPU and NPS. It might not have taken hold in the UK just yet, though there is plenty of evidence for the sceptics to mull over on the continent.

e-SIM Market 2019: A slow burner with impressive growth potential

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Helen Gaden of the MVNOs Series talks us through some of the key findings of a recent report they conducted into the current state of the e-SIM Market.

A year ago, the announcement by Apple that its new iPhone XS, XS Max and XR handsets were to feature an e-SIM as part of a dual SIM configuration was meant to mark a watershed moment for embedded SIM technology. Surely, with arguably the world’s most iconic smartphone brand now embracing e-SIM, the world would see a rush of manufacturers following in its wake, and the beginning of the end for the removable SIM card.

That hasn’t quite happened. One of the reasons is likely to be that e-SIM compatibility is not a one way street. Not only do manufacturers have to take the decision to build hard-wired SIMs into their devices, but operators also have to change the way they provision network services to a device – for example, by adopting means of downloading a user’s subscription profile onto the embedded SIM, rather than just scanning the profile already contained on a removable chip.

Even though Apple, like Google before it with the pioneering Pixel e-SIM phone, has adopted the GSMA’s specifications, the industry has yet to see significant collaboration between OEMs and operators about how remote provisioning might work in practice. This has caused a delay in operators offering e-SIM services that new Apple XS and XR owners can take advantage of, which in turn has probably led to other manufacturers deciding there is no rush to bring their own e-SIM devices to market.

As Andrei Ivanov, Principle Technology Architect and CTO of Canadian telco Telus says, the last 12 months have been characterised by a slow trickle of operators making e-SIM services available for smartphone owners and developing ways to deliver connections. “Initial steps are to make e-SIM available for consumer via a printed QR code mechanism, with a transition to app-based enablement likely in the future,” he said.

Amongst operators, the earliest adopters of e-SIM in the wake of the Apple announcement were international roaming specialists like Truphone and KnowRoaming, which recognised the immediate benefits to their business model of offering seamless connectivity to multiple networks as people travel. Working with Japan’s KDDI, GigSky has since built an e-SIM-based travel solution which is provisioned and managed through an app, as described by Ivanov. In terms of e-SIM services in domestic markets, early adopters include the likes of DNA in Finland, and Indian carriers Airtel and Reliance Jio.

Another operator to launch e-SIM services domestically this year is Sri Lanka’s Dialog Axiata, although its focus has been largely on delivering eSIM M2M solutions for commercial and industrial markets. Lead Engineer Amila Saputhanthri said: “The physical SIM is one of the main drawbacks in IoT solutions. Therefore the eSIM with remote SIM provisioning capability will attract more users sooner than later.

“2G and 3G networks will be shut down [in Sri Lanka] in the near future to minimize operational costs. Therefore future proof technologies such as  NB-IoT and e-SIM are expected to be adopted across industry.”

Gregory Gundelfinger, CEO of global e-SIM and connectivity solutions specialist Telna, agreed that e-SIM was enjoying a lot of popularity in the IoT market, but believes it is yet to have anything like its full impact. “E-SIM is an imperative enabler for the future of IoT/M2M, it makes the deployment process simple and efficient,” he said. “This year, Telna has expanded its portfolio with white-list branded e-SIM solutions for business and consumers. It is a catalyst in the market.

“There are multiple innovative IoT use cases coming to market every day and the e-SIM has the power to transform and accelerate these developments.”

In terms of the future prospects for e-SIM, a recent forecast paper from Counterpoint Research predicted that shipments of e-SIM-based devices will reach almost two billion units by 2025, with a CAGR of 27%. It anticipates that most of this growth will be driven by the smartphone and IoT device markets, although it also expects devices like mobile hotspots, routers, PCs and laptops, drones and smartwatches fitted with e-SIM to grow in popularity.

One other interesting observation the report makes is that, despite the GSMA’s work to standardise e-SIM specifications, the majority of connected devices in circulation without a removable SIM currently make use of proprietary software alternatives, collectively known as soft SIM. This is largely down to the size of the soft SIM market in China. The paper’s authors predict that embedded hardware versions built to use the GSMA’s standard will become the norm over the next few years, although it also believes integrated SIM (iSIM), in which the UICC forms part of a larger chipset (system-on-a-chip, or SoC) will eventually become more popular in IoT.

 

For an in-depth examination of the e-SIM market as a whole, download the free report here.

The many opportunities eSIM promises for IoT

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Helen Gaden of the MVNOs Series talks us through some of the key findings of a recent report they conducted into eSIM and the opportunities and challenges it presents for IoT.

The Internet of Things (IoT) is opening up entirely new markets for mobile connectivity, and in doing so is reshaping the mobile industry ecosystem almost from scratch. From mobile phones, tablets and a handful of other gadgets mostly focused on consumer markets, demand for mobile services is now coming from dozens of different industry verticals, for hundreds of different purposes – everything from automated smart appliances in our homes to industrial machinery, connected vehicles and self-driving drones to monitoring systems in agriculture, healthcare, utilities and more.

It is a truly massive economic opportunity for the mobile industry and beyond. By 2025, it is predicted that there will be 25.2 billion connected devices in circulation. With all of them relying on mobile networks to stay on line, the mobile industry will be contributing close to $5 trillion in economic value – almost 5% of global GDP.

The catch is how the mobile industry embraces this opportunity and provides for all these new connections across so many new devices. The emergence of 5G, with the massive increases in network capacity and speed it will bring, will certainly help. But that does not resolve another, perhaps more fundamental challenge – how to provision, authenticate and manage network access for the mass deployment of billions of new devices when traditional mobile ecosystems have been based on a one-connection-per-user model.

That’s where eSIM comes in: to many analysts and observers, the switch from a removable SIM card to a user identification module hard-wired into a device has transformational potential for IoT. By 2025, it is estimated that eSIM will be present in two billion devices, with the proportion of total connections expected to rise steadily. But just how far do the opportunities for this virtual technology reach?

According to IoT solutions specialist Arm, eSIM will pay an integral role in revenue success for IoT, the technology they have called the “trillion device opportunity” for the mobile market. Arm predicts that revenues from IoT alone will be worth $10bn by 2025, but insists that embracing eSIM will be integral to that coming to pass.

So, what makes committed eSIM evangelists like Arm put so much faith in the technology when it comes to IoT? The added flexibility eSIM creates in the relationship between device/client and network provider might loosen the grip operators have traditionally enjoyed on network access, but it also opens the door to many more use cases for mobile technology.

For example, the connected car sector has stood out as an early adopter of e-SIM, with predictions that there will be 250 million connected vehicles on the road by 2020, while the total number of connections is expected to increase by a CAGR of 31%. Major manufacturers like General Motors, Jaguar Land Rover, Renault Nissan, Scania, Volvo, BMW and Daimler have all enthusiastically backed eSIM, partly because of the convenience of being able to embed a single, secure connection module in all vehicles ready to be shipped to any market.

But the connected vehicle sector also underlines the value of flexibility in network connectivity for IoT use cases. Connected cars rely on networks to provide a variety of services to vehicle owners, such as infotainment, real-time navigation, pay-as-you-drive insurance and breakdown services, telematics and diagnostics. With critical real-time services like navigation and breakdown provision, there’s a great deal of value in the subscription modules automatically picking up the best available network connection as the vehicle moves from place to place – especially when crossing international borders. This is of particular concern to the logistics and transport sector where fleet management and asset tracking systems need to be effective everywhere the vehicle or shipment goes.

There is also the potential for different services available in a vehicle to use different types of network according to their requirements, all provisioned through the same e-SIM. For example, while infotainment services like video streaming require the kind of high-bandwidth data services offered by 4G LTE, sending diagnostics and telematics data is much less bandwidth-intensive, and use of low-power networks like NB-IoT would be much more efficient and cost effective. The ability of eSIM to store multiple operator profiles at once opens the door to these kind of flexible choices, meaning network services can be matched closely to specific requirements.

The opportunities and advantages of a highly agile, adaptable connectivity ecosystem extend well beyond vehicle and transport industries. In utilities and agriculture, the use of self-driving drones to monitor pipelines, crops and other assets over large geographic areas offers a similar example. Automated drones require guaranteed connectivity wherever they go, with seamless transition between networks as required. Again, simple observational data such as that transmitted from sensors might be most efficiently carried on IoT-specific LPWAN networks, while streamed video would require 4G LTE or, in years to come, 5G. Goldman Sachs sees the value of the self-driving smart drone market as potentially rising to $100bn.

In manufacturing and industrial IoT, e-SIM is seen as a key enabler of so-called predictive maintenance, the use of predictive analytics and AI technologies to anticipate system issues in advance and take action before outages occur. A step beyond proactive maintenance, which seeks to resolve performance issues in the shortest possible time frame using advanced system monitoring, predictive maintenance promises to push availability, efficiency and performance guarantees to new heights.

The prerequisite for predictive maintenance is exceptionally high and consistent levels of data capture, which according to Arm poses a major obstacle. With the sophistication of modern digital processing systems, it often falls to OEMs to provide maintenance for equipment and machinery as an aftercare service. But their issue is that they ‘lose sight’ of their product as soon as it leaves their factory for the client. With e-SIM, data monitoring and analysis can be switched on instantly, providing a full picture throughout the lifecycle of the product, and with no interruptions even if it moves locations. It is this level of continuous performance data streaming that effective predictive maintenance relies on.

So overall, the widespread adoption of e-SIM gives equipment manufacturers opportunities to innovate with the type of devices they can add value to with connectivity and the range of form factors they can give those devices, including shrinking sizes and improving efficiency. It lets them rationalise product ranges with single designs that can be deployed across a wide range of markets, and it allows them to improve service and maintenance SLAs through predictive maintenance.

For operators, more connected devices across more industries opens the door to new markets and potentially enormous increases in their client base. Yes, e-SIM challenges the one device, one network model around which operators have built their traditional business models, loosening ties with customers and introducing more competition. But that in itself should be seen as an incentive to transition to the more service-oriented business models that best suit B2B markets.

Rather than jealously guarding activation to their networks through their own proprietary SIMs, operators should be encouraged to work in partnership with IoT service providers offering their expertise to support flexible, scalable ‘Network-as-a-Service’ platform models that meet the demands of business and enterprise clients.

 

For more insights into the relationship between eSIM and IoT, download the full report: “eSIM: Challenges and Opportunities for IoT.”

APAC MVNO market is the fastest growing and most diverse in the world

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, the MVNOs Series talks to telecommunications expert Gary Bhomer to get his views on the current state of APAC’s MVNO sector. With over 25 years’ experience in the Telecommunications industry, Gary Bhomer discusses growth drivers in the region, eSIM, digital enablement, 5G and the emergence of b-brands in this e3xclusive Q&A.

Could you start us off by telling us a bit about growth in the APAC region? 

The APAC MVNO market is indisputably both the most diverse and fastest growing MVNO region in the world. Naturally, growth and adoption vary greatly between countries, with some slower than others, but that does not detract from its overall growth performance when compared to other regions. between countries. Whilst there are a few countries where activity is high, countries Australia, Japan, Hong Kong, Malaysia and South Korea are ones to watch as they are leading the way with MVNO adoption in the region.

Markets like Australia and New Zealand are well developed with similar MVNO penetration and characteristics to major European countries.  Japan, South Korea, Malaysia and Singapore are well developed Asian markets with substantial progress in MVNOs. Then you have the rest of the Southeast-Asian markets like Indonesia, Thailand, Vietnam, to name but a few, which have only opened up relatively recently to MVNOs. If we add China into that mix, you’ll see that Chinese operators are currently in the process of entering other markets as an MVNO, and you’ll also see a substantial mix of MVNOs in their home market, with more of a focus on large Enterprise MVNOs like Alibaba and Lenovo. India has so far has seen very little in terms of progress of MVNOs, but it remains a huge opportunity just the same.

Generally speaking, the regulatory environment in most Asian countries has become much more supportive of MVNOs, resulting in accelerated MVNO subscriber growth in the region. APAC really is a fascinating region in terms of MVNO development with quite diverse telecoms regimes and stages of development where each country has its own unique characteristics.

Of the many exciting technologies entering the market, which ones do you think will have the most significant impact on MVNOs in the APAC region and why?

There are two major developments that I see having a substantial impact on the MVNO market, which are eSIM and digital enablement.

Starting with the former, eSIM will soon to be ubiquitous amongst handheld devices. Indeed, this virtual solution to the SIM is set to become available by default on the majority of new handsets being launched. In markets where MVNO penetration is sub scale (i.e. < 20%), like most Asian markets, this technology will create a huge opportunity for MVNOs to attract and connect with new customers. Especially as eSIM technology becomes more mainstream.

It will, further, substantially simplify and accelerate the process of migrating from one provide to another, removing a barrier to change similar to what Mobile Number Portability (MNP) did for the industry over the past 10-15 years.

Onto the latter, digital enablement is sure to cause waves in Asia because of the region’s demographic.  That is, Asia’s demographic chiefly comprises young users who are, by and large, tech-savvy, active mobile users. As one might expect, the younger mobile users like to use their mobile phone for just about everything and anything, preferably through an intuitive user interface or an app where they have full digital access to various services and contextually relevant offers. Here, we are not just talking about flexible and personalised plans, we are talking about gaming, e-commerce, and value-added services etcetera.

We have already seen the success of Circles.Life in Singapore and Yoodo in Malaysia, both of which have developed business support platforms through which they can use insights and data analytics to quickly launch new products and services for their customers in a more intuitive and engaging manner.

I expect many more new MVNOs to enter the Asian market and beyond being fully digital as those that do not adapt will be left behind.

There is lots of evidence about digital disruption in other industries like taxi (e.g. Uber and Grab), travel and accommodation (e.g. Tripadvisor, Airbnb), media and entertainment (e.g. Netflix, Prime, Apple) etc. All of these services have been enabled by communications networks but they have not had a proportionate increase in commercial benefit. The Telecoms industry must adapt or it risks being left as a pure ‘bit pipe’ player.

What are your thoughts on 5G, what are your predictions and expectations for 5G launch and roll out, and how do you think the above will affect MVNOs?    

There is a lot of hype surrounding 5G, and with good reason. 5G promises to improve speed and lower latency in ways no technological development has done before. Symptomatic of these benefits is the enablement of new business models. Ones that revolve around IoT connectedness, driverless cars, new industry models in healthcare, manufacturing, smart cities, in particular, can flourish given 5Gs high speed and low latency capabilities. Overall, I predict that 5G will transform the industry over the mid-long term.

In the short term, I am of the view that MVNOs are unlikely to reap any major benefit from 5G. Not least because in order for MVNOs to access 5G, mobile network operators (MNOs) would have to agree to resell the 5G access to them. If the past is anything to go by, we should expect to wait some time before this happens: there are still some operators limiting access to 4G technologies, despite its widespread adoption over the past 5 or so years. Removing MVNOs even further from the possibility of harnessing 5G for their own gains, there is also a distinct possibility that operators will seek to charge a premium for 5G access.

Where operators are willing to provide 5G for their MVNOs, I expect the initial use case to be around mobile or fixed broadband replacement, given its initial, more limited coverage. This will likely be followed by 5G mobile plans with the promise (and delivery) of higher speeds and allowances.

And onto IoT, what impact will this technology have on the APAC region?

IoT is still in its early stages, but I feel we’re on the cusp of more widespread adoption. There is no shortage of devices, platforms, networks and solutions, however these essential inputs haven’t really managed to come together to offer end-to-end solutions. This is where MVNOs get to play an important role moving forward, as they can take away the complexity for potential end users via partnering with relevant providers. These IOT MVNOs will have to move away from traditional consumer mobile offerings to more complex B2B solution providers in order to become successful.

In your panel discussion at this year’s MVNOs Asia event, you’ll be discussing the growth of b-brands in the APAC region. Could you tell us a bit more about this?

Most countries have seen an increase in b-brands, which is where an incumbent mobile operator uses a second brand to target a segment or demographic their existing brand has difficulty addressing. It is also a way for an operator to protect its retail brand when targeting customers with lower ARPU seeking a simpler offering without the bells and whistles traditional operators offer. This has been the traditional domain of a large number of successful MVNO’s and therefore has a negative impact as they are seeing their bases targeted by these b-brands putting more pressure on MVNO revenues and margins.

As a result of b-brands entering the market MVNO’s have to work even harder to develop and deliver a differentiated and compelling proposition. It is not enough to have cheaper prices and low-cost distribution as these are not sustainable differentiators. MVNO’s must therefore develop new products and partner with companies that can help them evolve and adapt to the ever-changing dynamics of the marketplace.

 

If you want to find out more insights from Gary, find out more about the MVNOs Asia event where he’ll be speaking.

The top five markets to watch in the Asia-Pacific MVNO sector

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Helen Gaden of the MVNOs Series talks us through some of the key findings of a recent report they conducted into the Asia-Pacific MVNO market.

The Asia-Pacific region is alive with examples of every single nuance that plays a role in the MVNO industry – positive, open regulatory environments, and those that shut the door on virtual operators completely, highly successful symbiotic relationships with MNOs and monopolistic wholesale markets that strangle innovation and opportunity, MVNOs extending their reach into new markets, into new services, driving value with new business models, and embracing new technologies. Look to the APAC region and you can see it all.

The only problem with such enormous size and diversity is that it can be difficult to see the picture in full, or even to know where to look. However, there are certainly some key countries which emerge as key markets to watch; that standout as impressive growth drivers for MVNOs. In fact, there are five to be specific: China, Australia, Singapore, Japan and Vietnam.

Starting with the former, China’s MVNO sector finally seems to be finding its feet. With the entire Chinese mobile ecosystem adding an estimated $750bn to the country’s economy in 2018, equivalent to 5.5% of its GDP, China is certainly a nation where mobile technology takes central stage in economic strategy. And after testing the waters with an initial MVNO license trial in 2014, the Chinese government finally decided it had seen enough to make the experiment permanent last year, opening up licenses to international players for the first time as it looks to increase competition in the market.

As Renato Andrade Reis points out, China already represents a huge success story for MVNOs in that the 5% share Chinese MVNOs have of the country’s 1.2 billion mobile subscriptions has been achieved against the background of some hostile market conditions. “In China the market has developed despite the issues on pricing that in the beginning were complicated due to heavy competition from the local operators,” he said. “Growth has been based innovation – gaming, VAS, extra features. Chinese MVNOs really do present something of a white paper strategy example.”

In Australia, likewise, the market has grown substantially. As Gary Bhomer, founder and principal at Sydney-based firm Tel-Consult, points out: the growth in the Australian MVNO market “shows no signs of abating, with several new entrants on the way. Over the past two years MVNOs have taken an additional 3% market share and now account for a total of 13%.

“We’re seeing more non-traditional telco’s launch mobile propositions as an extension of brand. For established brands, an MVNO strategy can be a good way to extend an existing brand into a new segment, and provide a compelling way to interact and cross sell / up sell as well as leverage unique insights into your customer base. Recent examples include Nu Mobile, owned by Macquarie Bank, which has aggressive plans and second hand handsets as their key differentiator (Boost Mobile also recently launched second-hand device sales).“Other pending launches include Circles.life who are expecting to launch in the coming months following on from their success in Singapore, having also recently launched in Taiwan and planning at least two other Asian market launches.

Onto Singapore: their MVNO market has experienced one of the fastest rates of growth anywhere in the region over the past couple of years. Spearheaded by Circles.Life, one of the big MVNO success stories anywhere in Asia, virtual operators’ share of market climbed to 3% by the end of 2018, after the first virtual operators launched only two years previously.

While Circles.life embarks on aggressive expansion plans into other regional territories, 2019 has seen a succession of new MVNO launches in Singapore itself. The trend seems to be for larger telcos using the MVNO model to launch sub-brands targeting younger consumers, with examples including Giga, owned by the MNO StarHub, and Grid Mobile, a joint venture between Singtel and ST Telemedia. International players are getting in on the scene, too, with Malaysian brand redONE launching a subsidiary in Singapore ahead of planned roll outs in Vietnam and Thailand too.

But it isn’t just MVNOs that are adding to the competitive nature of Singapore’s mobile industry, either. Australian operator TPG Telecom last year became the fourth MNO running a network in the city state’s condensed mobile market, and announced its arrival with a low-cost SIM-only offer.

Across the pond in Japan, where more than 80 active MVNOs operate and over 18 million SIM connections are active, the Japanese virtual operator sector is one of the longest-standing and most developed across the APAC region. It has also enjoyed one of the most sustained periods of growth of any market – since 2014, Japanese MVNOs have more than doubled their share of mobile subscriptions, with the figure standing at 10.6% at the end of 2018.

During the same period, mobile ARPUs fell by 9%, which industry research consultancy Analysys Mason says compares favourably with the rest of the region. So while a growth in MVNO market share tends to be associated with falling prices due to increased competition and discounting strategies, Japan’s MVNOs have been able to grow share with theoretically better margins than most.

A couple of Japanese brands to draw attention to include the IIJmio consumer brand, which boasts 1.074m subscribers, and Rakuten Mobile, which has 1.5 million subscribers and recently announced the takeover of fellow Japanese MVNO DMM Mobile for US$21.2m.

On the other side of the coin, Vietnam is one of the youngest MVNO markets anywhere in the APAC region. In fact, the country’s first virtual operator launch took place as recently as April 2019. But after nearly a decade of frustrated attempts to get MVNOs off the ground in a nation of 95.5 million people, largely because of apparent reluctance on the part of the country’s MNOs to switch focus to wholesale services, there is now real hope that the model could take off in a big way over the coming years.

The pioneer Indochina Telecom Company (Itelecom), for example, has agreed a deal with carrier VinaPhone, mobile subsidiary of telecoms giant VNPT. Itelecom is reported to be focusing its initial service offerings on industrial workers in nine provinces and cities. Malaysia’s redONE, meanwhile, has plans to become the country’s second virtual operator by October this year.

The country also has a young, tech-savvy population, with high rates of smartphone penetration backed up by a fast, extensive 4G network. This, naturally, bodes well for hopeful MVNOs. Whilst the big carriers, Viettel, VNPT (through is Vinaphone brand) and MobiFone operate in a saturated market which has experienced flat growth for the past five years, the kind of service innovation and differentiation brought by MVNOs looks the main route to returning the mobile sector to growth.

 

For a more insights on this, download the free MVNOs Series report

Q&A: Renato Andrade on industry growth and transformation and in APAC MVNO space

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Renato Andrade, an independent MVNO consultant for Acqua Telecom, sat down for an exclusive Q&A with the MVNOs Series to talk growth in Asia’s MVNO market, disruptive technologies and the ways in which MVNOs can leverage IoT to achieve success.

Can you give us a snapshot of the APAC MVNO industry as you see it?

We are seeing exciting developments in APAC’s MVNO industry, that’s for sure. Back in 2015, there was a lot of excitement surrounding the launch of MVNOs in China, but that was short lived: following a market war between the MNOs in the country, it became impossible to launch any MVNOs because the wholesale pricing actually ended up being higher than the retail pricing offered by MVNOs. Korean and Japanese MVNOs came into similar trouble due to regulatory changes.

Now, however, the APAC MVNO market in gaining momentum. This year, the regulatory blockers that had in the past stymied MVNO growth were lifted, which has consequently allowed MVNOs to flourish. This is especially true of China, where is has now claimed a healthy 5% share of the entire market.

In addition to the more relaxed market regulations and subsequent drops in wholesale prices, it must be noted that, particularly in China, Value Added Services from the MVNOs themselves play a big part in the customer attraction to these brands. MVNOs in the APAC market have been quick to catch onto this, following in the footsteps of frontrunner China. What does this mean? Let’s just say that the booming MVNO industry in China created somewhat of a domino effect, in that it demonstrated to other governments in the region that opting for the alternative option of MVNOs  can be a good (in this case very good) cause to pursue.  That is precisely what happened in Thailand and, soon thereafter, in Indonesia.

Whilst the growth we are now witnessing can be attributed an loosen market regulation and the drop on wholesale prices, it must be noted that, particularly in China, Value Added Services from the MVNOs themselves play a big part of the customer attraction to these brands examples which are closely followed in other APAC markets. Let’s just say that the booming MVNO industry in China created somewhat of a domino effect, in that it demonstrated to other proxi governments in the region that opting for the alternative option of MVNOs  can be a good (in this case very good) cause to pursue.  That is precisely what happened in Thailand and, soon thereafter, in Indonesia.

How is the telco landscape evolving the APAC region and how does this relate to MVNOs?

Much like the telecom operators in the rest of the world, telecom operators in the APAC region are focussing their efforts on 5G. More specifically, they are focussing on 5G deployment and working around the issue of profitability: how can they ensure that 5G is profitable for their business?  Unfortunately for operators in the APAC region, they also share a common dilemma felt by the other operators elsewhere on the planet.  5G has huge potential as an opportunity, yes. That’s a given. But, unfortunately, there aren’t yet enough applications available for operators to be able to sufficiently leverage this technology to drive up their profits.

That’s where MVNOs come into play. Now that MVNOs are no longer are viewed by operators as a threat themselves, yet, as a partner on diversifying the MNO’s customer acquisition efforts, MNOs are looking for MVNOs to also further help them fund their 5G deployment. IIJ in Japan has demonstrated that in Japan by partnering with Docomo and reaching areas and market niches that were not available to them before. The majority of MVNOs in Malaysia the same as they even sell their plans and cards within the main MNO’s shops and retailers.

On another level, yet still related to the growth of the MVNO market worldwide, MNOs are also depending on MVNOs to bring forward technologies and solutions themselves couldn’t focus on such as IoT, AI, MFS and others.

On IoT, for an MNO to operate a simple Smart City project it involves a high degree of knowledge of the particular city, customer service, engineering work, product managers and all the other resources needed for the project to be completed. For MVNO however, given that these are ventures themselves and developed by locals, deploying such as solution is much simpler – no high degree of planning (assuming these are locals) and 100% of the times much more successful and cheaper. Hence MNOs are absolutely open to support such MVNOs going to maket as it is a win win situation.

On MFS, by partnering with banks and Fintech companies, MNOs are expanding their Valeu Added Chain and bringing in new profits, increasing customer loyalty and ARPU on the process…and they don’t need to apply for Banking licenses, operate banking services, etc. They are simply making profits.

On AI very much the same, only this time it is outside development and research been fed into the existing MNOs structure and hence lowering costs, improving their service resulting on gains for the MNO. Imagine for a second that the MNO had to develop the AI themselves, the cost of such and the time for it to be implemented.

Are there any disruptive technologies that you see shaping the MVNOs industry in the APAC region in a significant way?

MFS is favourite of mine in terms of new technologies that have been implemented by MVNOs. EThis applies especially to Asia, where the WeChat and Alibaba payment platforms that use MFS technology are already common practice. MVNOs are enjoying ahealthy chunk of that market, with scertain MVNOs actually surviving solely on their banking services.  For some,  it may has been seen to be responsible for over 70% of their profits.

Undoubtedly the most talked about technology is 5G. You touched on 5G before, but what are your predictions and expectations for 5G launch and roll out, and what impact will this have on MVNOs?  

For MVNOs , the main play for 5G will be the development of the VMNOs – Virtual Mobile Network Operators – also referred by the MNOs as 5G Slicing.  Given the huge cost of deployment MNOs must contend with on their network, VMNOs will  very soon play a key role for MNOs  in expanding their reach to rural, hard to reach areas and customer niches. I see this as the MVNO of the near future, something that I expect will be the norm from 2020.

MNOs call it 5G Slicing and MVNOs call it VMNOs. It is basically the same. It means that the MNO would “slice” their frequency for 5G and create a “private channel” on which the MVNO could directly explore. For instance, Emergency services requires a private channel within the frequencies and antennas in order for it to be always available. IoT services also have the same requirements…so much they may even be placed on alternative networks, such as IoT-B or LoRa, etc on 4G.

MNOs are at the moment looking to sell these “slices” to several players and the pricing these players pay for it supports their own Network development.

How can MVNOs work with IoT and how can they become successful in the IoT space?

MNOs have neither the resources nor the knowledge to implement Smart Cities projects in less populated cities, whilst MNOs MNOs lack the attention requirements to attend to SmartMeters or Smart Services on an individual level. In fact, even if they did, their numbers would never add up to justify the implementation on the first place.

These are some of the millions of opportunities available for IoT MVNOs – covering the ground MNOs can’t.  Energy companies may need a set of coverage and systems in order to monitor their networks which sometimes may involve rural, difficult to reach from a traditional Network designing plan that MNOs are accustomed to deploy, or perhaps within a city, focusing on the buzz of Smart Cities, areas underground need to be monitored or require a more extensive set of systems to monitor for instance surveillance or smart services. The list is vast and no constrained by any means at the moment as thousands of projects are launched every year focused on monitorisation and smart services.

In your panel discussion at MVNOs Asia, you will be addressing the role of IoT in the APAC MVNO space. Specifically, what role will IoT play in shaping the APAC MVNO industry?

The IoT key role for MNOs is the deployment of 5G. We need to look back 5 years and remember all the promises 5G have made in terms of connecting devices and hence growing MNOs ARPU and reach. The reality nowadays for IoT is that the MNO needs ideas, operations, entrepreneurship which have come at a high cost and most of the time low profits. The way out of the problem is to outsource IoT services to smaller players, rightly called IoT MVNOs whom are more flexible and ready to take the task.  Everything from Smart Cities to Smart Meters are now better handled by such MVNOs and the MNOs are embracing that.

 

Interested in hearing more insights from Renato? Find out more about the MVNOs Asia event where Renato will be speaking

Simon Davies of Acqua talks eSIM, 5G predictions and growth drivers for MVNOs

Simon Davies is a leading MVNO consultant working at Acqua Telecom. Having worked in the industry for years and specialising in Product Marketing, Sales Management and PreSales, the MVNOs Series caught up with him for a quick Q&A to find out what his predictions were for MVNOs over the coming years.

What are the new/key disruptive technologies shaping the MVNOs industry in the APAC region?

In the short term, I see eSIM technology having a significant impact, both on MVNOs and on the end user:

From the MVNO’s standpoint, eSIM have both financial and logistical advantages. Talking financials, MVNOs can dramatically reduce their expenditure when they shift to the eSIM because the virtual nature of it allows them to curb the stocking and distribution costs associated with traditional, physical SIM cards. Equally noteworthy, eSIMs eliminate the burdensome manufacturing delays that usually come with new SIM batches. For those MVNOs that are involved with ‘low stickiness’ customers, this should have a significant benefit; less so for the MVNOs that have a more long-term clientele. The former includes SIMs aimed at travellers as well as the more classic ‘throw-away’ style SIMs.

From the viewpoint of the end user, their benefits are more straightforward: eSIMs equal an easier user experience by removing the physical SIM and replacing it with a virtual one, consumers no longer need to concern themselves with the often-difficult process of extracting and inserting the SIM into their mobile devices – no more  scouring the house for paperclips or safety pins! . This is especially relevant to consumers that want to replace their main SIM with a temporary one for short-term use, a situation in which there is often an ongoing risk of losing their main SIM. Of course, this doesn’t apply to dual-SIM phones.

Moving onto the mid-term there is no doubt that 5G has to be the main focus. It is certainly the most talked about disruptive technology across the globe, and it promises ample opportunities both for MNOs and MVNOs (even if the killer applications have not really appeared yet).

The 5G applications that do look like opportunities – online gaming and interactive video, as well as industrial M2M – are probably already covered by the MVNOs and MNOs and the process is iterative rather than a step change. Nonetheless, nobody can ignore this game-changing technology poised to offer the most striking opportunities in the last few years.

What are your predictions and expectations for 5G launch and roll-out?

Overall, I expect that we will experience a situation like that of the arrival of 4G, in that the operators will attempt to ring-fence the new technology for their own use for as long as possible.

However, there will also be differences: two to be exact.  The first difference I predict, is a much faster adoption of 5G use by MVNOs compared to 4G. Unlike its predecessor, the change cycles are getting much shorter and the commercial pressures are greater where 5G is concern. And this, in turn, I see pushing MNOs towards allowing 5G use by MVNOs at a much quicker rate.

Secondly, the range of use cases for 5G are far greater than when 4G first arrived, which means that a true niche market the Holy Grail for an MVNO – is much more likely to be available. This is especially true with the newer generations of MVNOs that are more a vehicle for semi privately accessing MNO networks than the classic consumer focused MVNOs.

In my view, this will be the same for markets worldwide: the timing will be the significant differentiator.

What are some key growth drivers in the APAC MVNO industry?

A key driver of growth in the region would definitely be technological changes and advancements, with particular emphasis on eSIM and 5G . They are driving growth by offering MVNOs (as well as others in the food chain) the opportunity to, on the one hand, reduce their own costs and offer a better, simpler user experience and, on the other hand, to take advantage of exploring new niche use cases and business verticals. MVNOs can profit from a changing environment. Changes in the regulatory environment for MVNO operations have also proven to encourage growth. One need only look at the relatively recent changes in India’s regulatory environment, which are starting to bear fruit in the way of operational MVNOs). In India, active permission to operate MVNOs coupled with a willingness by the MNOs to support them is starting to change the scene, and there is hope that other countries in the region may follow suit.  Namely, countries like Pakistan where MVNO regulations have existed for many years, but neither the intent of the regulation or the mindset of the industry has allowed commercial operations to start.

What role will IoT play in shaping the APAC MVNO industry?

Where do I begin? We are seeing more and more MVNOs, as mentioned above, that are quasi-private deployments that need commercial and technical interfaces to the MNO but are distanced from any consumer business. These are the models that are being used to supply IoT connectivity today in areas such as vehicle data communications (cf Cubic Telecom supplying the VAG group) and elsewhere.

The difference with IoT is that the consumer model that uses the amount of data transmitted and the number of active SIMs has long been proven to be inappropriate for IoT and a “supplied services” model has taken over in this area. This is less easy (difficult, even) to reconcile with consumer models when the MVNO is moving across to this part of the business but I am sure that it will be taken on more and more.

The other aspect to focus on with IoT for MVNOs is the shift in the general dynamics for a successful MVNO. From a European viewpoint, 10 years ago an MVNO which had 20,000 active users was considered to be well placed and successful. As the market has changed and consolidated and MNO sub-brands have arrived, a successful MVNO now needs to have 50-100k active users to survive. Thus, the bar has shifted for consumer focused MVNOs who are now looking elsewhere to see where they can operate and the obvious target is the IoT market.

In your upcoming talk at MVNOs Asia, you will be discussing the relationship between IoT and MVNOs. What is the impact of IoT on MVNOs and what steps are MVNOs taking to make sure they succeed in the IoT space?

If I talk in terms of what steps they are – or should be – taking, I think they should be looking very closely at the IoT ecosystem and deciding in which areas they could and should take part.

By this I mean that the IoT space has a number of dedicated parts ranging from the IoT application and device management all the way through to the network supplier. MVNOs can clearly play in this space but need to decide whether it is sensible to try and operate in other parts where there are well established specialists such as the device management space. Choosing which parts to play in for both commercial gain and to be seen to supply a complete (enough) package is key to breaking into this sector (IMO!).

Find out more about the MVNOs Asia event where Simon will be speaking here.

MVNOs view European market as most prosperous for growth

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article Helen Gaden of the MVNOs events series talks us through some of the finding of a recent survey they conducted into the European MVNO market.

The European MVNO market is the oldest, most established MVNO market in the world, and that brings with it its fair share of challenges. Mobile phone subscriptions are close to saturation point, with an estimated 467m unique mobile subscribers across the continent at the end of 2018, of which 111m are expected to belong to MVNOs (just under quarter of the market share), woes of a crowded market and higher penetration slowing growth have echoed across the continent.

Given the limited opportunities for increasing unique subscriber number, intense competition on price and modest patterns of revenue growth, it may seem counterintuitive that Europe is still viewed as the key region for driving global MVNO growth. And yet, a recent survey carried out by the MVNOs Series would seem to refute any such notion. Indeed, calling upon industry leaders across the globe, the survey asked participants which region they viewed as the most promising for growth. And the result? The majority cited Europe as the one market with the greatest potential: 40% to be exact. This constitutes the highest figure for any region.

Yes, competition in Europe’s mobile industry remains intense. But this is also viewed worldwide as making the region a hotbed of market innovation, a trait that is seen as playing into the hands of virtual operators – specialists in delivering niche, disruptive services in rapid response to shifting market demands.

Take Germany, Europe’s largest domestic MVNO sector and one of the most significant in the world. Their market enjoys a total of 135 active independent and carrier-owned MVNOs, which accounts for 19.5% of German mobile subscriptions. Similarly, in the UK a total of 77 active MVNOs enjoy a 16% share of the country’s mobile market. Germany and the UK are joined by France, Spain, Denmark and the Netherlands in accounting for the majority of the MVNOs operating within the European Union.

Some of the biggest virtual operators command market shares which compare favourably with the entire MVNO sectors of other countries, with Tesco securing 6% of the market, Virgin Mobile 4% and Sky Mobile, Talk Talk and iD Mobile each with 1% respectively.

Outside the EU, by some distance the most developed virtual network market is found in Russia. Russian MVNOs currently have a 5% market share with 37 active players, although this number is increasing faster than anywhere across Europe. A main factor in the rapid rise in the number of Russian MVNOs is the proactive approach taken by carrier Tele2, which in December 2017 launched its own MVNE focused on the Russian market. The company reported that its revenues from MVNO services tripled in 2018, with a total of 1.7 million subscribers signed up to providers using its network. It is forecast that, at present rates of growth, MVNOs could account for up to 15% of Russian mobile subscribers by 2022.

Another factor that allows for promising growth in Europe is the fragmentation of the European mobile market (i.e. a high number of individual domestic markets for the size of population, plus the prevalence of large, diverse urban communities) because it makes it difficult for large carriers to cater to everyone’s needs.

To add to that, the results of the survey revealed that both regulations and emerging technologies are seen as another key growth driver in Europe. New technologies causing seismic shifts in the MVNO space include IoT, eSIM and 5G, the latter of which is one of the hottest topics of conversation across the mobile industry in 2019.

 

For more in-depth insights, download the full European MVNO Market 2019 Report

Giffgaff managed to find a way to overcharge prepaid subscribers

UK telecoms regulator Ofcom has fined MVNO Giffgaff £1.4 million for double-charging some of its pay-as-you-go customers.

Giffgaff specialises in prepaid SIM-only mobile phone deals, in which subscribers buy chunks of data, etc, marketed as ‘goodybags’, in advance and then buy more when those are used up. Any data used when a goodybag isn’t active is charged at 5p per MB. It looks like there was some delay in properly recognising when a fresh goodybag had been purchased from a billing perspective, resulting in people continuing to pay the metered rate at the same time.

This resulted in 2.6 million customers being overcharged by a total of £2.9 million, which might seem like a lot but is only a quid per punter. Once Giffgaff realised what it had done it grassed itself up to Ofcom, which proceeded to spend the next ten months ‘investigating’ what it had already been told. This resulted in Giffgaff being fined £1.4 million, which would have been more if Giffgaff hadn’t fessed up and already attempted to refund the overcharging.

“Getting bills right is a basic duty for every phone company,” pronounced Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement. “But Giffgaff made unacceptable mistakes, leaving millions of customers out of pocket. This fine should serve as a warning to all communications providers: if they get bills wrong, we’ll step in to protect customers.”

Thanks Gaucho, but didn’t Giffgaff tell you what it had done and hasn’t it already taken remedial measures? What, exactly, have you done to further protect customers other than spend ten months mulling over how much to fine them? Even regulators can never resist an opportunity to self-promote.

Giffgaff seems to have missed a PR trick here too. There is nothing on its website or social media addressing this, so people are largely left to interpret the background to the fine themselves. For a prepaid brand that makes a virtue of transparency and value for money, this apparent shiftiness and surrendering of the narrative could end up being far more harmful than the fine itself.

FCC Chairman convinced by T-Mobile/Sprint concessions

FCC Chairman Ajit Pai has publicly stated he believes the concessions made by T-Mobile US and Sprint are enough to ensure the merger would be in the public interest.

Over the course of the weekend, rumours emerged over concessions the pair would have to make to get the support of the FCC, though rarely are sources so spot on. The merged business will now have to commit to a nationwide 5G deployment within three years, sell Sprint’s prepaid brand and promise not to raise prices during the rollout years, if it wants the greenlight of the FCC.

What is worth noting is this is not a greenlight just yet. Pai has said yes, though he will need a majority vote from the Commissioners. Commissioner Brendan Carr has already pledged his support, and we suspect Michael O’Reilly will in the immediate future also. The Democrats might want to throw a spanner in the works, but this would be largely irrelevant with O’Reilly’s support.

“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in a statement.

“This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

As you can imagine, T-Mobile US CEO John Legere certainly has something to say on the matter.

“Let me be clear,” Legere stated in a blog entry. “These aren’t just words, they’re verifiable, enforceable and specific commitments that bring to life how the New T-Mobile will deliver a world-leading nationwide 5G network – truly 5G for all, create more competition in broadband, and continue to give customers more choices, better value and better service.”

The first commitment made by T-Mobile US and Sprint is a nationwide 5G network. Considering Legere has been claiming his team would be the first to rollout a genuine 5G network for some time, it comes as little surprise the FCC will want to hold him accountable.

Over a three-year period, presumably starting when the greenlight is shown, the new 5G network will cover 97% of the population. 75% of the population will be covered with mid-band spectrum, while the full 97% will have low-band. This is a very traditional approach to rolling out a network, as it meets the demands of capacity and efficiency, though there is a sacrifice on speed.

Perhaps more importantly for the FCC, the plan also covers objectives to bridge the digital divide. 85% of the rural population will be connected during this period, increasing to 90% after six years. This is not to say all the farmers fields will be blanketed in 5G, though it does help provide an alternative for the complicated fixed broadband equation in the rural communities.

Moving onto the divestment, selling Sprint’s Boost prepaid brand seems to be enough to satisfy the competition cravings of Pai. What is worth noting is this will not be a complete break-away from the business as it will have to run on the T-Mobile US network. Unfortunately, MVNOs in the US are not as free to operate as those in Europe, as switching the supporting network would mean have to change out all the SIM cards.

This becomes complicated as you do not necessarily know who your customers are in a prepaid business model. The situation certainly encourages more competition, it will after all not be part of the T-Mobile US/Sprint family anymore, but it is far from a perfect scenario.

Finally, Legere has promised tariffs will not become more expensive during the deployment period, another worry for the FCC should the duo want to meet the ambitious objectives to compete with AT&T and Verizon. However, it does appear Legere is promising 5G tariffs will not include a premium either.

And now onto the other side of the aisle. Commissioner Jessica Rosenworcel has tweeted her opinions on the concessions and it appears she is not convinced.

“We’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”

Rosenworcel has also suggested the decision should be put out for public consultation. We suspect Pai will want to avoid this scenario, as it would be incredibly time-demanding; the Chairman will want the merger distraction off his desk as soon as possible.

Commissioner Geoffrey Starks is yet to make a comment, but DO NOT, I repeat, DO NOT go on his Twitter page if you haven’t watched the latest Game of Thrones episode.

We understand the Democrat and Republican Commissioners are going to be at each other’s throats over pretty much every decision, however trolling any innocent individual with a GoT spoiler is a low blow.

Starks and your correspondent are going to have some issues.