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U.S. MVNO Market
Frost & Sullivan, July 2006
This Frost & Sullivan research service titled United States Mobile Virtual Network Operator (MVNO) Markets provides a market overview, revenue forecasts and demand analysis, and strategic recommendations for the MVNO markets.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Mobile and wireless communications
- MVNO
- Mobile virtual network enablers (MVNE)
Technologies
The following technologies are covered in this research:
- Mobile data
- Network technologies - 3G,
- Code Division Multiple Access (CDMA)
- Global System for Mobile Communications (GSM)
Market Overview
Customer Focused Strategies Likely to Drive MVNO Markets
Though relatively young, the U.S. Mobile Virtual Network Operator (MVNO) market is poised for solid organic growth in the coming years. A number of interested companies with strong brand recognition and marketing prowess have recently made forays into this segment in the United States. This has subsequently hiked competitiveness for existing participants as well as aspirants in this space. In addition, the value additions delivered by MVNOs have the potential to attract more customers, according to the analyst of this study. Unique personal relationships, value-added differentiated services, and focus on hitherto unexplored segment of population drive popularity and growth of MVNOs.
The customer-focused approach adopted by MVNOs is likely to pay rich dividends in the future. Their existing brand equity and customer loyalty is likely to be cemented by their efforts in offering differentiated services that add value. In addition, their unique relationship with their customer base is likely to play a pivotal role in their contribution to the wireless industry. Unlike carriers, MVNOs have the freedom to explore prepaid, immigrant groups, teens, and even credit-challenged segment of the society. This factor is likely to boost revenues and mileage.
Mutually Beneficial Relationship with Carriers to Drive Growth for MVNOs
Despite promising aspects of MVNOs such as the elimination of capital expenditure (CAPEX) investments in the network spectrum and carriers benefiting with customer addition and increased revenues, these markets face challenges. MVNOs depend on the network capability and spread of the carrier to offer their services and as a result, carriers can adopt a controlling attitude towards the former. This issue needs to be addressed carefully in the agreement between the two parties to avoid conflicts, leading to a devaluation of services. MVNOs leverage their popularity as a brand while entering the wireless space and draw a loyal customer base. The challenge lies in maintaining the customer loyalty as well as its brand equity by providing compelling wireless services.
As carriers and network operators concentrate their resources on the transition to next-generation network environments and spend huge amounts of CAPEX to buy network spectrum and augment network standards, their dependence on MVNOs rises. Ideally, carriers are likely to temper daunting challenges by fostering strong and long-term partnerships with MVNOs as they are expected to aid in augmenting services, customer acquisition, and generating revenues through differentiator services, explains the analyst. Besides, the revenues generated by the MVNOs are shared with the carriers and are mutually beneficial as they balance the carriers’ spending on network augmentation.
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