After years stuck in the slow lane, China's MVNO market is finally hitting its stride.
MVNOs have racked up around 110 million users, and are adding around 10 million subscribers per month, according to Miao Jianhua, president of the China Communications Enterprise Association.
That is more than 5% of the national mobile subs total and about a fifth of the number of MVNO subscribers worldwide, Miao told an industry event in Beijing last week.
The industry has been growing in double digits this year, with total monthly revenue of more than 300 million yuan ($42 million), according to Tao Chengyi, a senior engineer of China Information and Communication Research Institute.
It's been a climb since the first MVNO pilot licenses were issued five years ago.
With high leasing costs and an ARPU margin as low as RMB3 yuan ($0.43), about half of the first batch of 40 MVNOs never bothered to start service. (See Snail Sets Pace for China's MVNOs.)
Those who did struggled, even after the government mandated that MNOs offer wholesale prices below their lowest retail prices.
But in the last couple of years they have focused on segments such as international roaming, IoT, wearables and platform services. Growth and profitability reached the point where in May last year the government felt comfortable issuing full commercial licenses, including to major brands such as Alibaba, Xiaomi, JD.com and Lenovo.
Tao said the MVNOs' advantage was that they were strong in diverse areas where the network operators were weak, such as content and apps development.
Among the services being offered are Xiaomi Mobile's IoT hardware platform, Lenovo Connect's PaaS and SaaS services, Snail Mobile's bundling of international roaming and games downloads, and the niche services offered by Sharing Mobile that big operators won't provide.
Among the three big operators, China Unicom is most invested in the sector, accounting for around 70% of all MVNO connections.
But Tao said the other two players should also see MVNOs as a way of better competing in the low and mid-range markets.
"If the network operators want to achieve the goal of increasing revenue and reducing expenditures, they should strengthen cooperation with MVNOs," he said.
But with 5G on the horizon, MVNOs also need the cooperation of the network operators, he added.
"5G's low latency and high reliability scenarios are the driving force of the future. If MVNOs want to carry out this business, they need basic operators to open up more network capabilities," Tao said.
— Robert Clark, contributing editor, special to Light Reading