Traditionally, telecom has been dominated by Mobile Network Operators (MNOs) who own the infrastructure and control the flow of communication through their networks. With the advancement of technology and the shift towards open-access networks, we’re witnessing a diversification of ownership models and a proliferation of network-sharing agreements. This evolution is fostering greater competition and efficiency in the telecommunications sector.
In the last two decades, we have seen the entry of new telecom players in the form of Mobile Virtual Network Operators (MVNOs), supported by Mobile Virtual Network Aggregators (MVNAs) and Mobile Virtual Network Enablers (MVNEs), who have added fresh competition and innovation into the market. But one thing has remained constant- MNOs have held all of the power and MVNOs have invariably relied on them to operate.
Telecom-as-a-Service (TaaS) is disrupting the traditional concept of telecom through its cloudification of connectivity – offering more flexibility, control over customization, and a customer-centric approach to telecom. Other than utilizing their infrastructure and radio access networks (RAN), true TaaS companies like OXIO do not rely on MNOs, providing new freedom to companies who want to offer connectivity to their customers. TaaS offers a cloud, platform-based, technology-first approach to telecom that has never been seen before.
In this blog we’ll be introducing you to this new concept of Telecom-as-a-Service, and distinguishing between traditional telecom and the new era of connectivity through TaaS.
What is Telecom-as-a-Service (TaaS)?
Telecom-as-a-Service (TaaS) is a cloud-based telecom delivery model, where the provider productizes telecom into one simple platform that’s made available via an online subscription model.
Sophisticated TaaS providers pull existing telecom networks into a global core, where they can be easily accessed by enterprises, brands and even influencers seeking to offer mobile services to their customers and audiences.
TaaS removes the complexities of managing physical mobile networks and brings the control into the cloud where telecom can be seamlessly managed and deployed like any modern Software-as-a-Service (SaaS) solution. This frees companies who are using TaaS from the burdens of physically building and maintaining their own network infrastructure, allowing them to focus on their core business strategy and competencies, such as customer service and innovative product offerings.
How is TaaS unique?
TaaS exhibits several key characteristics that define its nature and distinguish it from traditional telecom models. These include cloud-based delivery, on-demand service, scalability and flexibility, reduced capital expenditure, and a focus on intelligent and data-driven user experiences.
TaaS gives companies full control over every aspect of their telecom network, in a simple, efficient and modern way. Not only do companies have the flexibility of a global telecom network, but those using certain TaaS innovators have access to a set of powerful features and functionality, providing them with business insights that highlight customers’ online behavior and movement.
If we take a look at the traditional telecom models and players, you will start to understand how unique and exciting the TaaS concept really is.
What is a Mobile Network Operator (MNO)?
Mobile Network Operators (MNOs) are telecom companies that provide wireless voice and data services to their mobile phone subscribers. MNOs own, operate, and maintain the entire telecoms infrastructure needed to sell and deliver services to customers. This includes building and maintaining cell sites, upgrading network components, and installing equipment, ensuring their mobile network is as robust and reliable as possible to meet the growing demands of customers.
Put simply, MNOs control everything that makes it possible for you and I to make and receive voice or video calls, check Instagram, watch YouTube, and access our work email on the go. MNOs have been the backbone to what has kept us connected to the world.
Mobile Network Operators (MNOs) are also known as carrier service providers, mobile phone operators, and mobile network carriers, and typically there will be no more than 2-4 licensed ‘nationwide retail’ MNOs operating in a country. You will also see other regional MNOs in the market who are doing more speciality and niche deployments – low power networks to support sensors for example.
Examples of well-known MNOs include AT&T, China Mobile, Verizon, América Móvil, Telefónica and Deutsche Telekom.
In the late nineties, MNOs began to realize that they couldn’t be all things to all people and were struggling to compete and grow organically. MNOs typically approached all consumers as having similar lifestyles, needs and demands, resulting in underserved and unreached market segments, often left frustrated by the lack of mobile offerings that truly met their needs. Because of this, MNOs started to leverage their networks to attract and acquire MVNO customers, or launch MVNOs of their own.
In many countries, there was also significant intervention by governments and unions, who used their influence to change policies and laws around telecom to encourage a more competitive landscape for consumers. The European Union, for example, liberalized telecom in Europe during the nineties and abolished all MNO monopolies, helping new MVNO entrants to offer services in competition, and on equal terms, with the ex-monopolies who had up until that point, dominated the market.
What is a Mobile Virtual Network Operator (MVNO)?
Mobile Virtual Network Operators (MVNOs) offer mobile communication services to consumers, without owning the wireless network infrastructure being used. Instead, MVNOs lease network access from MNOs and then provide their own services to customers under their own brand. MVNOs are essentially branded resellers that leverage the network coverage of their parent operator and rely entirely on that carrier to operate.
You, as the consumer, might not even be aware that the network you’re using is owned by a different company. Because of the lower overheads associated with not owning telecom infrastructure, MVNOs can spend aggressively on their marketing campaigns to increase their chances of winning you as a customer. As an example, Virgin Mobile UK, the world’s first MVNO to launch in 1999, achieved 6% market share within 5 months by offering a very simple tariff to subscribers. In 2020, PilloFon, an MVNO started by Mexican YouTube influencer Luisito Comunica, became Mexico’s fourth fastest growing telecom company in less than a year after launch.
The MVNO market can be split into two defining categories:
Light MVNOs:
- MVNO-type with the lowest barriers to entry
- Little-to-no telecom experience
- Will purchase network services at wholesale prices from MNOs or through a 3rd party, and resell them under its own brand
- More likely to work with a 3rd party (MVNE or MVNA)
- Light up-front engineering needs
- Heavily dependent on MNOs, with little flexibility on plans and services that can be offered to customers
- Bait Mexico is a example of a light MVNO
Full MVNOs:
- Most sophisticated type of MVNO
- Invests fully in their own core network infrastructure and handle operations like billing, customer service, SIM card provisioning and more
- Will work with a MNO to connect their servers to the MNOs cell towers to access connectivity
- Higher degree of service flexibility and differentiation, with the ability to offer a wider range of services including voice, data, and multimedia
- Heavy engineering requirements when launching
- Little or no dependency on MNOs when it comes to plan flexibility
- Lebara is an example of a full MVNO
How do MVNOs succeed against MNOs?
Compared to MNOs, MVNOs are nimble, innovative and cost-effective. MVNOs will focus on niche market segments, offer lower priced plans, and operate without the constraints of building and maintaining a physical network, which is complex, time-intensive and expensive.
By capitalizing on market differentiation and segmentation rather than merely competing on connectivity and price, MVNOs give themselves a distinct competitive edge over MNOs who often follow a one size fits all approach. Some MVNOs target very specific, underserved, and unreached customer segments such as expats, students, business customers, ethnic groups, and the elderly, making them truly unique in the market.
A great example of this is J1 SIM Cards, an MVNO designed specifically and exclusively for travelers on a J-1 VISA, who may be studying or working in the United States. Other good examples include Ecotalk in the UK, which aligns themselves with ethical issues and focuses on serving environmentally conscious citizens; PureTalk which targets senior citizens and military veterans in the US; and TIC A.C, a Mexican MVNO focused on serving indigenous communities.
The world’s first MVNO, Virgin Mobile UK, launched in 1999 and as of late 2023 there were more than 2000 MVNOs operating in 90 countries across the globe, with the market estimated to be valued at $81.42b this year. Examples of some popular MVNOs include Dish, Freedom POP, OUI, Lycamobile and giffgaff.
MVNOs have fostered competition in the market, driven innovation, and ultimately benefited consumers, providing them with more choice at lower prices. But being an MVNO in the traditional telecom ecosystem isn’t easy.
Every MVNO depends on the quality of the network of the underlying MNO they partner with and the flexibility and customization of plans on offer to customers can be restrictive based on the type of MVNO you are. This, coupled with trying to scale quickly and keep up with market changes, can make it hard for MVNOs to remain agile, competitive and profitable.
To help reduce the costs associated with wholesale MNO agreements, something many MVNOs consider as their biggest challenge, MVNOs started to work with MVNAs.
What is a Mobile Virtual Network Aggregator (MVNA)?
A Mobile Virtual Network Aggregator (MVNA) is a company that serves as an intermediary, or ‘middle-man’, between an MNO and an MVNO. MVNAs aggregate multiple MVNOs and negotiate wholesale access to the MNOs’ network on their behalf. Essentially, MVNAs facilitate the connectivity between MVNOs and the underlying mobile networks.
Many MNOs prefer to use an MVNA rather than working directly with multiple MVNOs, as it saves time by selling access to just one company and bypassing multiple contractual complexities. This was particularly true back in the late nineties, when MNOs first started to leverage their networks to acquire MVNOs.
The benefits for MVNOs using an MVNA, include streamlining operations and getting access to good wholesale rates that help reduce costs, particularly if you are a smaller MVNO.
Examples of MVNAs include Plintron, Paretrum, and SUMA Móvil.
The entry of MVNAs into the telecom ecosystem has in turn helped facilitate the entry of more MVNOs into the market, by making airtime process easier and more efficient for both MNOs and MVNOs.
Although MVNAs provide some degree of customization and flexibility to MVNOs to differentiate their offerings, they are still heavily reliant on the MNOs they work with and a network itself is not enough to support successful MVNO launches. Besides infrastructure, MVNOs need business systems that support and enable them to focus on attracting, acquiring and retaining customers.
Because of this need, MVNOs started to work with MVNEs.
What is a Mobile Virtual Network Enabler (MVNE)?
A Mobile Virtual Network Enabler (MVNE) is a B2B company that offers infrastructure and support services that enable MVNOs to provide connectivity to their own customers.
MVNE’s provide the technical platform, billing systems, operations, and admin support that allow MVNOs to operate without having to invest heavily in building and maintaining their own network infrastructure and business systems. In short, MVNEs enable MVNOs to enter the telecom market quickly and efficiently.
An MVNE is purely a telecoms solution, providing no connectivity services and having no direct relationship with an MVNOs end customer.
MVNOs will work with MVNEs when looking to reduce upfront capital expenses, cover initial start-up costs, and cut down wholesale airtime costs (achieved through economies of scale through hosting multiple MVNOs on a single MVNE platform). Other potential benefits for MVNOs will be lower operational expenses, smoother launch processes and benefitting from the experience of the MVNE as a negotiating channel for operator wholesale agreements.
Using an MVNE might not always be appropriate for an MVNO, particularly for those MVNOs who are large enough to achieve volume efficiency when going direct to an MNO, have a sufficiently strong brand and distribution channels to negotiate compelling deals with MNOs, or from an MVNO who already has access to existing telecom infrastructure- typical of an MVNO that has launched as a sub brand of an MNO or if you are a ‘Full MVNO’.
Examples of well known MVNEs include Plintron, Effortell, Optiva and Circles.
The Future of Telecom and TaaS
TaaS provides a broader, holistic telecom offering that challenges traditional telecom concepts, effectively enabling anyone to become an MVNO without requiring telecoms experience or expertise, and without requiring any input from an MNO.
By bringing connectivity into a turnkey online platform built for management and distribution, similar to the way Stripe innovated financial services, companies can now build and deploy telecom products in an out-of-the-box manner without expensive overheads or the expertise needed to manage the complexity of telecom and telecom regulations.
The new era of TaaS delivers global telecom capabilities at scale via simple APIs and tools. Not only does this challenge legacy telecom business models, but companies like OXIO give their customers access to new first-party telecom data that can power their marketing campaigns and strategies, leading to more robust and enriched customer relationships and greater long-term revenues.
Instead of pitting MVNOs against MNOs and resellers against providers, with TaaS the focus moves to customized experiences and flexible access to coverage, representing a shift from the limitations of the past towards a more adaptable and customer-centric future.
OXIO is the world’s first cloud-native, programmable TaaS platform that offers a one-network solution to any brand or enterprise. Reach out today for a demo and to discuss how you can join the network of the future.
