USA MVNOs marketshare of 10%

At the end of 2018 the USA market had 10% of its subscribers served by Mobile Virtual Network Operators (MVNOs).  On the surface this number may seem like the MVNOs are well penetrated in the United States.  However, looking a little deeper a different story may be concluded.

Firstly, one MVNO, Tracfone, Carlos Slim’s interest in the USA and the world’s largest MVNO, holds 22 million of the subscribers, or around 55% of the US MVNO market, leaving the remaining 132 MVNOs in the US with 18m customers to share.  In an industry where volume is critical to obtain competitive wholesale costs from the host network operators, this means most MVNOs will struggle to offer competitive pricing for sustained periods.

Secondly, most MVNOs are confined by the arrangements they have with their host operators to the discount and prepaid segments.  Recent analysis by WorkBench concluded that the marketshare of revenue could be as low as 4.75% for all MVNOs combined.

Thirdly, compared to other parts of the world, 10% market share is low.  Market share of MVNOs in Europe exceeded 36% and Asia Pacific in the last year has become the most successful marketplace for MVNOs where the share now exceeds 46%.

The US market remains heavily concentrated and it is the view of WorkBench that some easy to implement, yet practical steps could help stimulate more competition.  Firstly, some regulation to assist the ballooning costs of acquiring customers in the market could help.  The regulator could play a role in stimulating, or even forcing, the onset of eSIM technology to decrease the switching barriers for consumers and MVNOs.  The regulators could also ensure that contractual terms locking an MVNO to exclusivity with a particular carrier are not allowed, with an eye on the wholesale pricing offers at the same time.  Lastly, in a market where around 80% of subscriptions are postpaid, some simple regulation to assist MVNOs to break into that space could be effective. The most powerful would be the forcing of unlocking of handsets and separation of the handset contract from the cellular connectivity.

Despite the challenges, WorkBench sees the US market as one of the most attractive on the planet.  The USA, surprisingly, has the second highest cost of mobile internet in the world.  With an ARPU of $35 the opportunities are enormous still for MVNOs. Yet it also has the one of the highest earnings per capita and 320m highly segmented people to target who have an addiction to digital services.  

Please reach out to WorkBench for market entry strategies for USA MVNOs.