IoT MVNO count has increased

The number of mobile virtual network operators (MVNOs) serving the IoT market appears to have increased dramatically over the past few years. At conferences we attended over the last 12 months, for example, we observed more MVNOs at each event, counting those exhibiting and not, than we did at any single IoT conference we attended in North America over the prior decade. In addition, a market survey using online searches for IoT data connectivity providers yielded dozens of companies, many relatively young and new to our tracking list. Because of this, we think it is timely to review the MVNO space, including possible drivers of the increase as well as differentiation that increases the probability of creating long-term value.

What is an MVNO?

All IoT solutions require access to a communication network to transmit data captured by physical devices to the cloud. Applications requiring wider transmission range and greater throughput often use cellular. These IoT providers make arrangements with third parties for cellular access and compensate them for the quantity of data passing over their networks. Arrangements can be made directly with mobile network operators (MNOs), also known as cellular service providers (CSPs) or carriers, who own radio spectrum and physical infrastructure essential to enable long-range communications, such as towers, base stations and core networks.

These large, household-name carriers, which include AT&T, T-Mobile, and Verizon, among many others, made significant investments in wireless infrastructure to support voice and consumer mobility (smartphone) services, and they continue to spend material sums for upgrades and maintenance. Alternatively, IoT solution providers can source connectivity indirectly through MVNOs. MVNOs don’t own spectrum and rarely own infrastructure. Instead, they negotiate agreements with several different MNOs, which give them access to each MNO’s network and those of their partners, leasing data capacity and establishing wholesale rates at which they can purchase data that is subsequently resold to solution providers.

MVNOs can be categorized by whether they own physical infrastructure, the software capabilities provided (whether proprietary or third-party) and customer support offered. The most basic MVNO type is a branded reseller that doesn’t own infrastructure, offers no value-added capabilities or support, and just focuses on marketing and selling connectivity; carriers and other partners provide the things these MVNOs lack. The other MVNO types are more interesting and add more value, as they made the strategic decision to invest in hardware infrastructure and/or software to enable some proprietary capabilities, provide dedicated customer service and support, or integrate with third parties for needed capabilities. The most advanced of these is a full MVNO, which owns infrastructure elements, offers the complete range of software needed to manage IoT connectivity, and provides service and support.

Between these extremes are “service provider” MVNOs and “light” or “enhanced service provider” MVNOs. Other slightly different types include “efficiency” MVNOs, which focus on specific and niche markets and strip out material cost that gets passed onto to customers (often under a bundled offering), and MVNOs that procure connectivity from other MVNOs instead of MNOs. Across these variations, many MVNOs establish their own brands, investing materially in marketing to increase visibility and in field sales and support teams to find opportunities and facilitate IoT solution deployment.