In June Transforma Insights published an update on its IoT MVNO market landscape report first published in November 2021 and revised in December 2023. The new report includes profiles of 234 MVNOs (up from 188 previously) around the world. Based on that analysis we draw some conclusions on the current state of the IoT MVNO market landscape.
Note: the report is NOT to be confused with the Communications Service Provider IoT Peer Benchmarking Report, publish in October, which provides a deep-dive view of the capabilities and strategies of the leading connectivity providers, both MNOs and MVNOs (and those sitting somewhere in between, as discussed below).
The first challenge is to define exactly what we mean by an IoT MVNO. This is a non-trivial task.
The term ‘Mobile Virtual Network Operator’ (MVNO) covers a wide range of different organisations with different capabilities. The main defining characteristic of MVNOs is that they sell cellular-based connectivity but do not operate a facilities-based radio access network (RAN), although many will operate core network elements. However, this is something of an over-simplification.
Based on the definition above, MVNOs (including the likes of 1NCE, Eseye, KORE, and Wireless Logic), can be considered a separate category of connectivity providers from MNOs, (including AT&T, Deutsche Telekom, Orange, Telefonica and Vodafone), which do operate their own RAN. However, we should note that the role of many of the IoT business units is evolving to be much more like an MVNO. There are many MNOs for whom the majority of connections are supported on other operators’ networks, including Tele2 and Telenor Connexion. Similarly, several MNOs have sought to disengage all or part of their IoT operations from those of the parent MNO, effectively acting more like an MVNO, such as Telefónica and Vodafone IoT.
There are also a few MNOs with very small domestic markets that have established IoT business units for whom the vast majority of connections are overseas. For this reason, companies like DEEP (the former POST Luxembourg) should not strictly qualify as MVNOs as they operate mobile networks in their own domestic market. The same historically would have been true of JT Global, although it has spun out its IoT business as Velos IoT. We have chosen to consider these smaller operators in the report, because their operations more closely resemble those of MVNOs than of their larger MNO peers. Many also offer Mobile Virtual Network Enabler (MVNE) and sponsored roaming capabilities used by significant numbers of other MVNOs.
The other complexity is that there are many more elements to a network than just radio access. Many leading MVNOs have their own dedicated core networks, as well as connectivity management platforms and other value-added capabilities. Again, this is a sliding scale, with many companies doing little more than reselling connectivity from other providers, all the way through to those providing rich end-to-end service offerings.
In the report we distinguish five main tiers of ‘MVNO’:
Our segmentation between the layers is shown below, with tiers 2-5 anonymised.
It should be noted that many MVNOs do not fit perfectly into this categorisation and there is some flexibility in how we rate them.
One of the main reasons for doing this research is that it allows us to identify trends in the market for IoT connectivity.
Transforma Insights has published numerous reports about the use of eSIM and remote SIM provisioning, particularly the arrival of the new SGP.32 standard. With SGP.32 there is a potential for significant disruption in the IoT MVNO model. eSIM offers a new model for connectivity. Customers can ‘bring their own’ connectivity in the form of eSIM profiles from network operators and use a separate platform as the mechanism for managing those profiles. This results in the emergence of a range of operators where the focus shifts from reselling connectivity to operating an eSIM orchestration platform (as discussed in the report ‘Commercial, technical and regulatory dynamics drive the rise of the eSIM Orchestrator (eSO)’. Many will continue to resell the connectivity directly, but much of their operation is predicated on acting as the orchestration platform. Companies such as SIMPL, Simplex and TEAL have already made significant moves in this direction. At the same time there are ‘single-pane-of-glass’ platforms for managing connectivity where there is an obvious extension into acting as an eSIM orchestrator.
The upshot is that the defining characteristic of the MVNO (i.e. reselling connectivity) becomes a less significant role, and in some cases not a role at all. In that scenario we suspect that the entire concept of the ‘IoT MVNO’ has a limited shelf-life. The market will evolve in the next year or two. The format for this equivalent report in a few years will likely be very different.
We have long been predicting a consolidation in the IoT MVNO market due to the requirement to gain scale to offset declining revenue per connection. However, in the period since the last report was published (December 2023), we have noted just nine MVNOs as having been acquired by other MVNOs. That compares to 28 in the two years prior to the publication of the previous report. This indicates a slow down in M&A. As usual, Wireless Logic led the charge with three acquisitions over the period (Arqia, Comms365 and Zipit Wireless).
The growth in the number of MVNOs covered in the report is down to uncovering more players. However, there have certainly been a group of new arrivals. However, these bring precious little in terms of new business models or interesting approaches. Most are clearly just skins on MVNE/sponsored roaming provider offerings and comprise ‘me too’ style offers.
We still, for instance, await the emergence of a significant number of IoT MVNOs focused on addressing the needs of a particular sub-segment of the market, e.g. a particular vertical or use case, rather than being horizontal. Some players, such as Kajeet and OptConnect do have such an approach, but we have yet to see the emergence of large numbers of new players adopting such an approach. In what is a crowded, highly commoditised, and largely undifferentiated market, having a specialisation in terms of understanding the pain points and ‘contextualising ’ a horizontal proposition for IoT buyers is very valuable.
Despite most new arrivals offering little in the way of innovation, we have noted a number of quite interesting trends in pricing, from comparing price points to spotting new approaches to charging. These findings were published in a separate report ‘IoT MVNO approaches illustrate trends in cellular connectivity pricing’.
The cellular IoT connectivity market continues to experience downward pressure on underlying connectivity prices, particularly for low-data applications, although some providers have increased list prices to offset inflation and operating costs. At the same time, pricing models are becoming more diverse, with providers introducing daily charging, uplink-focused tariffs and other alternatives to traditional per-MB charging.
There is also a growing shift toward application-specific propositions, with dedicated plans emerging for use cases such as security cameras, solar installations, trackers and alarm systems. Finally, providers are increasingly monetising value-added services, including support packages, service-level agreements, device management and software capabilities, indicating a gradual transition from pure connectivity pricing toward broader service-based business models.
Another potentially interesting barometer of the health of the sector is the number of people it employs. As noted in a separate blog ‘Employee growth offers interesting insight into the IoT MVNO market landscape’ the IoT MVNO market landscape looks healthy, with employee numbers growing 17% over the past 2 years.
