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