Is Webbing the IoT MVNO of the Future? Why Might More Virtual Operators Follow Its Lead as the Connectivity Revenue Mix Changes?

In August, Wireless Logic acquired Webbing, an Israel-based Mobile Virtual Network Operator (MVNO) known for its support of high-throughput Internet of Things (IoT) applications and involvement in the new SGP.32 Embedded Subscriber Identity Module (eSIM) standard. The company’s purchase of Webbing comes months after it acquired Blue Wireless, a Singapore-based wireless network provider. The company also recently acquired Jola, an IoT SIM provider, and IoThink Solutions, an IoT platforming company.

Through its acquisition of different IoT service and connectivity providers, Wireless Logic—like many MVNOs—is diversifying its IoT services and target markets as connectivity and connectivity management revenue declines in the MVNO market.

Its acquisition of Webbing, in particular, conveys that Wireless Logic viewed Webbing’s eSIM involvement and business strategies, which are unique in the market, as prescient, while other players in the MVNO market attempt to insulate their business from shifting service revenue.

Connectivity is the primary offering of an MVNO. Virtual operators’ ability to package carrier connectivity and offer global coverage through eSIM technology has made these organizations necessary to many IoT customers. Often small and flexible organizations, MVNOs can offer specialized, innovative services to niche IoT customers often left underserved by Mobile Network Operators (MNOs) that prefer to support large IoT deployments. The traditional MVNO business model—aggregating carrier connectivity and reselling it at a discounted rate to smaller businesses—has made virtual operators a forward-thinking part of the IoT market.

However, several forces in the MVNO market have deflated connectivity and connectivity management revenue, disrupting a foundational part of the virtual operator business. More customers have moved their connections from legacy 2G and 3G networks to LTE-M and Narrowband (NB)-IoT, Low Power, Wide Area (LPWA) networks that yield lower revenue per connection than previous network generations. MNOs have offloaded these new LPWA connections to MVNOs to avoid managing deals with such low returns. Some MVNOs, such as 1NCE, have made a concerted effort to attract and support these LPWA connections. Other MVNOs have diversified their offerings, some acquiring device expertise or investing in verticalized services to insulate their business from the revenue pressure generated by LPWA connections.

The MVNO market is also experiencing heavy pricing competition, as disruptive pricing models (e.g., 1NCE’s flat rate) and discounted reselling rates further decrease connectivity Average Revenue per User (ARPU). Webbing could be considered somewhat of an outlier, as these market trends have roiled others in the industry. Webbing focuses primarily on IoT applications such as video surveillance and telemetry, which are heavy-throughput applications that yield greater connectivity ARPU than traditional IoT LPWA applications such as metering. The company also supports enterprise devices, such as laptops and iPads. Supporting non-IoT use cases is rare in the MVNO industry, as many virtual operators singularly pursued the IoT to differentiate themselves from carriers that focus heavily on non-IoT network traffic. Supporting IoT and non-IoT use cases could bolster connection numbers and increase network traffic for MVNOs, buoying their IoT businesses, while IoT connectivity revenue falls.

Webbing has also been a prominent player in eSIM innovation. The company’s WebbingCTRL solution, which preceded the SGP.32 standard, closely mirrors the new GSMA protocol and alleviates some of the pain points customers experienced with the old Machine-to-Machine (M2M) eSIM standard. Its involvement in the new eSIM standard is one of the reasons Wireless Logic acquired the company.

As connectivity revenue declines, many MVNOs have attempted to bolster their offerings by investing in improved device expertise, robust security services, and device-to-cloud services such as data orchestration and application enablement. Investing in these new services is an important strategy as service revenue shifts in the MVNO market. According to ABI Research, Device Management Platform (DMP) services, IoT security services, and other value-added services will account for 44.5% of all service revenue in the MVNO market in 2030, with connectivity and connectivity management platform services revenue accounting for the rest. Virtual operators investing in these value-added services are rightly assuming that MVNOs must become more than “just” connectivity resellers. By focusing on high-throughput applications, non-IoT connectivity, and advanced eSIM technology, Webbing could indicate other ways in which MVNOs can try to protect their business and compete with carriers.

Webbing's support of non-IoT use cases could be a particularly successful strategy for MVNOs in the future. Like Webbing, other MVNOs, including Transatel, 1GLOBAL, and Kajeet, support non-IoT connectivity. For these organizations, consumer and enterprise connectivity revenue could fund innovative IoT business units that would otherwise be inhibited by low ARPU. In the future, more virtual operators could be like Webbing, searching for new strategies and business plans that disrupt their reputation as IoT-only service providers.

It is important to note that connectivity remains an integral part of an MVNO's offering. Customers continue to prioritize advanced coverage and reasonable connectivity prices, and MVNOs that can offer global connectivity and valuable carrier partnerships will continue to have an advantage. MVNOs cater to a fragmented market and can find business with a diverse range of customers. Finding additional avenues of profitability, whether in value-added services or through non-IoT offerings, will better equip MVNOs to cater to these diverse markets in the future.