MNOs vs MVNOs in IoT connectivity: report reveals trends

IoT Analytics recently released its IoT Mobile Operator Pricing and Market Report 2024-2030, shedding light on notable trends within the cellular IoT sector.

According to the comprehensive 159-page report, there were 3.6 billion active cellular IoT connections in 2023, representing approximately 21% of global IoT connections. The report also features a detailed database that includes various pricing scenarios for a typical 4G connectivity end-user case.

The report highlights that Mobile Network Operator (MNO) services and Mobile Virtual Network Operator (MVNO) services both provide cellular IoT connectivity but differ significantly in pricing. MVNO IoT services are generally less expensive than those offered by MNOs due to their lower overhead costs. Nonetheless, MNOs continue to remain competitive by providing value-added services and a diverse array of offerings.

In the United States, the report identifies Verizon, an MNO, and Transatel, an MVNO, as offering the most affordable services for a typical 4G connectivity scenario. In Germany, Telefónica and Onomondo are noted as the most cost-effective service providers in the MNO and MVNO categories, respectively.

Satyajit Sinha, Principal Analyst at IoT Analytics, commented on the impact of emerging technologies that could influence the market dynamics. "The integration of eSIM and iSIM technologies is poised to enhance MVNO competitiveness in the IoT connectivity landscape significantly. These advancements enable greater service plan flexibility and customization, potentially widening the competitive gap between MVNOs and MNOs," he said.

Sinha also noted that MVNOs' early adoption in sectors like automotive and their strategic pivot towards comprehensive IoT solutions could solidify their market position.

Kalpesh Baviskar, Market Analyst at IoT Analytics, added insights into the strategic approaches of MNOs. "MNOs have traditionally focused on offering pure connectivity services as their primary strategy in the IoT sector. IoT connectivity revenues, where less data is consumed over a longer period, remain a relatively small portion of their overall earnings, especially when compared to revenues from mobile phone plans and FTTH (Fibre to the Home) services, where more data is consumed by devices in a shorter period," Baviskar explained.

According to him, MVNOs benefit from not being burdened by the capital expenditures associated with network infrastructure, nor the pressure to generate immediate revenue. This advantage allows them to explore other areas within the value chain, such as offering IoT connectivity platforms and global connectivity through eSIMs.

Baviskar further elaborated on the shifting user preferences in the IoT landscape: "As user preferences move beyond basic connectivity towards comprehensive, vertical-specific solutions, MNOs are also shifting towards providing value-added services as enhancements to their data offering."

This evolution in strategy underscores the competitive tension between MNOs and MVNOs while highlighting the areas where each type of operator could strengthen its service portfolio, according to the report.