The IoT Mobile Virtual Network Operator (MVNO) market is experiencing a shift in strategy as connectivity revenue growth faces challenges.
According to ABI Research, the increase in Low Power, Wide Area (LPWA) connections – coupled with disruptive pricing models and discounted connectivity rates – has impacted the profitability of connectivity services for virtual operators.
Connectivity, traditionally the cornerstone of MVNO offerings, is no longer sufficient for profitability given intense pricing competition and the rise in LPWA connections following the shutdown of 2G and 3G networks. MVNOs, as connectivity resellers, also contend with offering services at discounted rates to Mobile Network Operators (MNOs), further hindering revenue growth in this segment.
To counter declining connectivity Average Revenue Per Unit (ARPU), virtual operators are diversifying their businesses by investing in value-added services.
ABI Research predicts that IoT MVNO revenue from services such as device and application platform services, IoT security services, managed services, and other value-added offerings will reach $1.9 billion in 2030—constituting 44 percent of all service revenues in the market.
MVNOs are expanding their portfolios to include device expertise, planning services, and on-device software, recognising the importance of integrating connectivity offerings with IoT devices. Some operators, like Eseye, focus on acquiring device expertise to enhance connectivity resilience rather than offering device management services.
As security concerns among IoT customers grow, MVNOs are also investing in virtualised private network offerings and SIM technology to enable roaming between private and public networks. Frictionless customer service and verticalised expertise are prioritised to diversify product portfolios and compete with traditional carriers.
To further broaden their offerings, MVNOs like Kajeet and Webbing are providing connectivity to both IoT and non-IoT devices, acknowledging that consumer devices yield higher average revenue per user compared to traditional IoT applications. This strategic move aims to support innovative IoT organisations that may face limitations due to lower returns.
The report concludes that, in the face of thinning connectivity margins, MVNOs will continue investing in device expertise and value-added services to cater to the evolving spectrum of customer IoT needs.
You can find a copy of the full report here (paywall)
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