How 5G will revolutionise the MVNO market

5G networks will create new business models for operators and MVNOs. How can they take advantage? Kate O’Flaherty talked to a few industry insiders to find out.

Soon-to-launch 5G is about to transform the business models of mobile operators and MVNOs. According to experts, this will see capabilities such as network slicing allowing MNVOs to run ‘mini networks’ for customers in specific sectors.

Unlike its predecessors 3G and 4G, the technology is not just about faster speeds. Based on a virtualised infrastructure, 5G offers the ability to ‘slice’ the network and assign each part a specific quality of service to fit a use case – such as low latency for connected cars.

With 5G comes more precise control. Based on this, slicing will enable mini networks – each offering a specific level of bandwidth, latency and reliability to benefit various use cases, says Greg Collins, Founder and Principal Analyst, Exact Ventures.

This offers the ability to target multiple vertical applications and markets, opening up opportunities for MVNOs. Collins cites the example of an MVNO-run branded mobile network for gaming. “This requires lower latency and higher bandwidth, so it could be enabled with network slicing.”

On the other hand, a branded network for home security could include high reliability, he says. Meanwhile, a content provider such as Netflix could run its own network, effectively becoming an MVNO. “Slicing offers lots of content delivery mechanisms and the opportunity for greater control over radio resources, which was previously under the control of the mobile operator. So, Netflix could become a mobile provider as well – and the telecoms operator just becomes a wholesaler.”

More broadly, MVNOs could be part of a model that sees them specialise in different service levels within a slice, says Ian Hughes, Analyst at 451 Research. “Some would specialise in fast control packets. Meanwhile, pure consumer MVNOs, which may have a demographic that watches video, can bundle services such as Netflix.”

Indeed, MVNOs can take advantage of slices configured and optimised to meet specific needs, says John Lenns, Vice President of Product Management at Oracle Communications. “With the ability to customise the compute, storage and networking functions of their infrastructure, MVNOs will have new business opportunities to create and offer bespoke networks and services to their customers,” says Lenns.

Industrial use cases

James Gray, Director at Graystone Strategy, thinks 5G will also create opportunities for MVNOs within industrial use cases such as critical machine Internet of Things (IoT). “This includes machines doing critical tasks requiring low latency such as industrial robots, m-health applications, drones and connected cars.”

Jan Häglund, Acting Head of R&D and Portfolio at Ericsson, says network slicing will open up possibilities for MVNOs and other service providers. “This is thanks to the isolation and interdependence of network slices: customers can be granted visibility, and then modify the slice to suit their changing needs – or they can create new network slices to seize a business opportunity.”

According to Häglund, this is “significantly more powerful in terms of flexibility, automation, and the ability to customise services, than the current MVNO model”.

The benefits are vast, but crucially, Dr Petrit Nahi, Chief RAN Scientist, Office of the CTO, NETSCOUT, points out, network slicing will allow MVNOs “to innovate and better differentiate themselves from the competition”.

At the same time, 5G could allow more network operators to launch their own MVNOs, Andrew Palmer, Consulting Director, CGI says. He cites the example of Vodafone, which has launched an in-house MVNO called Voxi, as well as O2’s GiffGaff and Three’s Smarty.

He thinks operator MVNOs could happen more in 5G. “It is seen as the ‘network of networks’ and will therefore support almost any access technology,” says Palmer. “This means the operators are faced with a challenge of whether to create their own networks.”

Taking this into account, he asks: “Would it make more sense to connect their existing networks to the shared infrastructure in an urban environment, for example, and then ‘lease’ the space on that infrastructure and access technologies, thereby becoming a 5G MVNO of sorts?”

This type of approach is already being used, Palmer points out. “For example, Vodafone and Telefonica have put Wi-Fi access points onto the lamp posts in the City of London and are running this as a wholesale service. Could similar ideas, possibly working as a consortium, be the most cost-effective way to deploy 5G in other cities?”

5G challenges

The potential is clear, but taking advantage of 5G will also pose challenges for MVNOs. If a provider such as Netflix was to form an MVNO, it would need to get the business model right, says Collins. “They have a good model where they create their own content and deliver it. Whether they could add telecoms services on top of that incrementally and charge a bit more is yet to be seen.”

In addition, there is a need for an entirely new ecosystem. If MVNOs own a 5G network slice, deploying their own virtual network functions and providing new applications and services for consumers, they need to need to establish an ecosystem of partners to be profitable, says Angus Ward, CEO, Digital Platform Solutions at BearingPoint.

He says MVNOs don’t currently have the right digital platform-based models in place to make the most of these partnerships. “MVNOs need to be able to package up the elements and supply a portfolio of services,” Ward says.

At the same time, 5G may prove a challenge to traditional MVNOs that simply want to offer their customers high bandwidth and low latency applications. This is due to the fact that mobile operators do not always make new technology available to MVNOs at the same time as their own customers.

“History has shown to date that MVNOs don’t always get access to new technology at the same time,” says Gray. He points out that the Asda Mobile MVNO did not gain access to 4G until last year – around five years after LTE first launched in the UK.

Once the challenges are overcome, 5G network slicing will open many opportunities to MVNOs. But the change won’t be immediate. Collins says: “I think it will be several years before we have network slicing services in 5G.”