By Chinmay Mishra, Senior Product Marketing Manager, Optiva • May 9, 2024
Chinmay has 13+ years of strategy and marketing experience in telecom and technology. A technology enthusiast, he evangelizes the use of data in decision making. Chinmay is an avid dog lover who devotes time to improving the lives of four-legged furry friends.
With around 275 million active mobile subscribers, North America (NAM) is one of the world's top three mobile communications markets, trailing only China and India. In recent years, NAM has positioned itself as a trendsetter and a technological leader in the world of telecoms, and analysts are already predicting that 2025 will be a breakthrough revenue year for operators.
That leadership is evident when we consider 5G adoption in the region, which was 40% in 2022 compared with the leading market in Europe, which was only 11%. The telecom industry also greatly impacts GDP growth, with 5G expected to contribute around $200 billion in 2030 to the NAM economy.
The market potential for operators is as strong as ever, but subscribers now have a greater appetite for convenience, competitive pricing, bundled services, and flawless connectivity. Traditional MNOs, often hindered by legacy systems and slow to change, are finding it increasingly difficult to tap into this new customer-centric environment, leaving the field open for cloud-native MVNOs who are far more agile and adaptable. The MVNO market has more than doubled in size in the past decade and continues to grow in scale and competitiveness.
The MVNO market is huge but also very regional, with different parts of the world experiencing different growth patterns and opportunities. In this series of articles, we focus on individual regions and their unique growth patterns and opportunities. In our first article, we focused on Asia Pacific (APAC); in this second article in the series, we turned our attention to NAM.
The North America (NAM) Market:
Chart 1: Source- GSMA - The Mobile Economy 2023 - NAM
The extensive rollout of 5G in the last few years has resulted in billions of dollars in capital expenditure. With the expense and limited increase in the mobile ARPU, operators’ focus shifted to return on investment. 5G in NAM has reached a point of diminishing returns for any new 5G investment. This means 5G expansion in low-density areas may take longer as new investments will be prioritized to support use cases enabled by 5G standalone (SA) and 5G advanced.
The NAM MVNO market was valued at $26.2 billion in 2023, and it is expected to reach $43.6 billion by 2030, growing at a CAGR of 7.6%.
Chart 2: Source - Mind Commerce Report 2023
Mobile adoption is already high and was 89% in 2022, and it is expected to grow to 91% by 2030, adding 25 million more customers over the next eight years.
5G adoption is expected to grow from 40% in 2022 to 91% in 2030, with around $390 billion in operator Capex over the next eight years.
Mobile data traffic usage in 2022 was 20 GB per month per smartphone, projected to grow to 58 GB by 2030.
Per GSMA, there were 140 MVNOs in the United States, serving 36+ million subscribers in 2021.
With the mobile industry already saturated, operators are considering innovative new revenue streams to ride the 5G wave and leverage capital investment. Encouraging and supporting the launch of new MVNOs that can help operators expand the 5G ecosystem without competing directly with their mobile subscribers offers a perfect opportunity.
The following trends highlight the growth opportunities and what we can expect from the MNOs and MVNOs in the NAM telecom market.
#1: 5G monetization imperative grows — focus on wholesale, enterprise and government
Operators in the U.S. and Canada saw some growth in the ARPU after the launch of 5G services, but more is needed to justify the huge 5G infrastructure investments. Operators are now urgently seeking to create new revenue streams for 5G.
The most immediate opportunity is to sell the underutilized 5G network to MVNOs, generating wholesale revenue for telcos. However, operators may be picky about the MVNOs they support to avoid competition and expand 5G capacity with an expanded ecosystem. Cherry-picking of MVNOs is also relevant to the other trends below.
With a 5G wholesale focus, operators that launch new MVNOs may also act as their own MVNE platforms, making the MVNO onboarding process fast and efficient. The MVNE market size in 2023 was $2.88 billion and is expected to reach $3.66 billion by 2030, growing at a CAGR of 3.1%.
The enterprise and government segments are also expected to grow significantly. We may even see new MVNOs/digital brands in this segment. These will be large, private 5G deals where the 5G SA capabilities of network slicing will be a factor.
Trends:
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Chart 3: Source - Mind Commerce report 2023
#2: Rise of IoT, M2M and new device MVNOs
We see that 5G MVNOs offer massive potential for growing the 5G ecosystem. 5G SA leverages the full value of 5G — high speed, massive device connections, and ultra-reliable low latency connections. The performance provides opportunities to go beyond mobile and launch new IoT, M2M, and alternate device MVNOs. The launch of Ai Pin by Humane is one such example. Acceptance of eSIM as the new normal has also helped accelerate the IoT growth and launch of new devices. Such new devices will help to expand the 5G ecosystem, which the operators themselves cannot do.
This open ecosystem approach, built on 5G infrastructure, will empower telecom operators to generate additional revenue and accelerate the expansion of the total 5G market.
Trends:
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Chart 4: Source - Mind Commerce report 2023
#3: Rise of new tech MVNOs — generative AI, distributed networks, metaverse and more
NAM, especially in the U.S. and Canada, will see the rise of new tech greenfield MVNOs, entering the market with a unique technology edge. Startups with proprietary technologies that provide new and enhanced customer experiences combined with disruptive and efficient business models will enter the highly competitive MVNO market with an edge.
Generative AI and metaverse applications focus on new devices and experiences. Web 3.0 and distributed networks focus on more efficient networks and business models.
Trends:
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#4: New MVNOs driven by a change in customer behavior and expectations
More consumers are expecting environmentally friendly behavior from companies. They want to contribute to the environment by associating themselves with green companies. The change in behavior is leading to the birth of new MVNOs with a green value proposition as an integral part of their brand and mission, which will continue to expand globally.
E-waste management: NAM has nearly 500 million active phone and smartphone connections. With more consumer and government awareness, an increase is expected in new MVNOs and digital brands that will aim for a minimal carbon footprint over the full lifecycle of a mobile phone. A rise in IoT devices makes this e-waste management more complex due to this expected expansion. However, new and existing companies will emerge that make this a priority and build the commitment to their brand.
Fintech: There is a rise in digital money and fintech startups across the globe. However, the NAM market growth in this area has been slower. Fintech transaction value is expected to double from $2 trillion in 2022 to $4 trillion in 2027. Financial services are also expected to move increasingly to mobile devices
Trends:
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The theme for MVNOs in NAM in the coming years is clear — 5G and new technologies. Most of the new MVNOs are expected to amalgamate cutting-edge technologies on 5G networks to improve human efficiency and experience — MVNOs born digitally with technology at their core.