By Jorge Suarez, Deputy CEO, Antel and Juan Carlos Jil – Senior Manager Tata Communications
The MVNO market in Latin American and the Caribbean region lags behind other key markets, but there is light on the horizon. A report by GlobalData[i] indicates that MVNO subscribers only represent 1.3% of the market in the region compared to 3.7% in Western Europe and 8.5% in North America. This is due to a combination of economic instability and political uncertainty in some countries, and the continuing dominance of Telefónica and América Móvil who have a combined base representing about 62% of the total in region subscribers. Even if the predicted tripling in Latin American MVNO subscribers from 7.4 to 21.1 million between 2017 and 2022 transpires, the sector will continue to face challenges – but opportunity exists.
Some countries in the region have recently made significant regulatory changes, opening up their markets to MVNOs, and providing an opportunity for new service providers to launch unique services and challenge incumbents with new service models. In Mexico the shared network approach is changing the overall market landscape with several new MVNOs entering the market. On top of this market liberalisation, developments in virtualisation and cloud technology – combined with new business models – represent a great opportunity for new MVNOs to succeed.
Limitations of the traditional approach
Quite apart from regulatory and market challenges, the traditional in-country BSS/OSS model, with all it entails, has not proved viable in many cases. It’s essentially an uneconomical model pitched against strong competition. The incumbent mobile network operators can afford to compete aggressively on tariffs and service bundles, providing a significant advantage over any new entrant MVNO.
Despite regulation designed to encourage MVNOs, it isn’t easy in practice for MVNOs to secure capacity at reasonable wholesale prices. Even where MVNOs manage to buy capacity at a viable rate, incumbent operators can always use marketing promotions to retain their subscribers or win back those who have churned. In such an environment, simply reselling capacity in an undifferentiated way quickly becomes uneconomical, especially when the costs of marketing, sales, customer service and licensing as well as running BSS/OSS systems is taken onboard.
Ahead in the Cloud
The MVNO market has fragmented, with specialist MVNOs now serving specific segments and niche markets with a range of specialist communications services. There’s an increasing desire among next-generation service providers, enterprises and OEMs to launch MVNO services, with some intending to focus on M2M, automotive, SME, youth, ethnic or other sub-segments and interest groups. This new generation of MVNOs want to launch differentiated services that combine a cloud-based model, service integration via APIs, and web-based self-service, with relatively little actual communications infrastructure.
The Mobile Network-as-a-Service (MNaaS) model perfectly suits this new MVNO dynamic. It has all the potential of a Mobile Virtual Network Enabler (MVNE) model, with no need for infrastructure or software investment. It offers a commercial model that can be scaled up or down as required – making it economical to offer MVNO propositions for smaller markets, ranging from just a few thousand to several million subscribers.
The virtualised network functionality inherent in the MNaaS model makes it easy to create, launch and develop MVNO services,. Dropped calls and data sessions might have been forgiven in the old discounter model, but poor service and connectivity issues are no longer acceptable. A good user experience is now an essential requirement for MVNOs – and that extends to quality and coverage, not just price.
Tomorrow’s MVNOs require more than today’s MVNEs can provide
While new MVNOs may have varying objectives and business models, there are several things they have in common:
The access options provided by an MVNE platform must enable MVNOs to offer sustainable differentiated services. MVNOs also need efficient and flexible charging, billing and settlement, with comprehensive BSS/OSS capabilities to ensure optimum service. They need access to security and fraud protection that can safeguard their customers and their business from ever-changing threats. They require partner management processes to ensure efficient, automated call and data session handling processes between the MVNO and their MNO host.
Mobile Network as a Service – MVNO ticket to the platform economy
The platform economy is an online service market that links customers with suppliers and combines web services with advanced analytics to create an infrastructure across which platform-based customer and IoT eco-systems can operate. MNaaS represents a cloud-based service platform approach for developing and managing new mobile services and IoT applications, using APIs in certain cases for 3rd party application integration, without the need to build and maintain a dedicated infrastructure.
The next generation of MVNOs in Latin America and the Caribbean can use the MNaaS model to participate in the platform economy. This makes it possible to pursue segments and services that haven’t been economically viable until now.
It will take a shift in thinking to realise the full potential of the mobile platform economy through MNaaS, but the next generation of MVNOs and their customers will come to think of mobility in the same way we think of the world wide web and cloud infrastructure today. MNaaS enables MVNOs to offer their customers unrestricted access to applications, connected devices and data via mobile, regardless of national borders. This approach levels the playing field for a new generation of MVNOs to launch and sustain profitable services in the region, ensuring a better competitive dynamic and a healthy communications market for the future.
A Partnership Empowering Latin America MVNOs
Antel and Tata Communications have joined forces to deliver a new operating model for MVNOs. The partnership enables a new generation of MVNOs to offer differentiated services and harnesses a combination of cloud platform, API-based integration, flexible BSS/OSS and the agility of MNaaS.
Antel and Tata Communications deliver cloud-based mobile and IoT services using a business model that minimises risk and lowers total cost of ownership while accelerating time-to-market. This is possible through a unique approach to sharing commercial risk. The partnership brings in-region technical expertise and experienced resources to support an MVNOs’ market strategy and launch and ongoing opewrations. A combination of Antel’s local market knowledge and world-class data centre in Montevideo, together with Tata Communications’ MVNE platform and global network reach enables an MVNO to quickly deploy new mobile and IoT services in country or across the Latin America and Caribbean region.
Latin America MVNOs can launch new mobile and IoT services without need for large up-front investments in their own mobile infrastructure, network service management or go-to-market operations.
The views and opinions in this piece reflect those of Antel and Tata Communications and not necessarily those of GSMA.
i‘MVNOs in Latin America’ quoted in Shaping the Latin American MVNO Market, Telecom.com https://telecoms.com/opinion/shaping-the-latin-american-mvno-market/