MVNOs and MVNEs: Simple, Automated, Cost-Effective Deployments

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1 White Paper MVNOs and MVNEs: Simple, Automated, Cost-Effective Deployments Executive Summary Today s mobile market is growing quickly, and the growth is not slowing down anytime soon. According to the Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast, , both the number of mobile subscribers and the volume of traffic are expected to grow dramatically. By 2018, there will be more than 10 billion mobile-ready devices and connections, about 3 billion more than in At the same time, the report indicates that in the same timeframe, global mobile IP traffic will reach an annual run rate of 190 exabytes, up from less than 18 exabytes in Mobile operators, enterprises, and over-the-top (OTT) players alike are looking at new ways to take advantage of the growth. New mobile virtual network operators (MVNOs) are appearing, and they can use the network and assets of mobile virtual network enablers (MVNEs) to set up their network and create new business models and enter different markets. In order to bring long-term business success in the MVNO and MVNE business, MVNOs and MVNEs need to use their current capabilities to their best advantage and create new and differentiated services that are hard for their competitors to replicate. With the Cisco MVNO and MVNE solution, consisting of the Cisco Policy Suite (PS) of software solutions, the Cisco Virtualized Packet Core (vpc), and the Cisco ASR 5000 Series Aggregation Services Router Packet Gateway, MVNOs and MVNEs can achieve the business outcomes in providing services that are segmented, targeted, and quick to roll out. This Cisco solution enables you to: Increase service value with innovative services to end users Generate higher perceived value in your services Differentiate yourself and effectively identify and gain market Develop an extensible platform that allows you to easily introduce new technologies such as access control Increase your average revenue per user (ARPU) as your business grows or increase the ARPU of your current base This white paper outlines typical use cases of MVNOs and MVNEs and the Cisco solution to address them. Market Trends for MVNOs and MVNEs Both MVNOs and MVNEs recognize the opportunities in the growing mobile marketplace, but they must be able to differentiate their services from other service providers to gain market share and grow profitability with new business models and lower-cost operational models. In markets where MVNOs are just beginning to operate because of regulators who open the market, it is imperative that MVNOs and MVNEs have a platform to roll out services quickly and with very low operating cost, as shown in Figure 1 with a survey by Informa Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 1 of 13

2 Figure 1. Performance of MVNO Market Two observations are notable: Price pressure commands more differentiation: An overwhelming majority of respondents believe that MVNOs need to differentiate their business models. Cloud-based services and mobile broadband are named as the most important service-differentiation tools. Countless business and technology challenges must be addressed: Respondents think that existing hosting platforms lack technical and commercial flexibility, all leading to excessive costs both in the startup phase and when fairly ordinary changes are needed (such as updating a service plan). The same survey showed the top business and technology challenges for MVNEs, as shown in Figure 2. An overwhelming number of responses indicated the importance of flexibility in the platform to provide new services, bundles, etc. Figure 2. Top Business and Technology Challenges for MVNEs 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 2 of 13

3 The Cisco Policy Suite platform allows MVNOs and MVNEs to meet those challenges with the following capabilities: Service velocity and service innovation Technology that will be compatible as the operator grows, including: Orchestration capabilities that save capital expenditures (CapEx) and operating expenses (OpEx) by using commercial off-the-shelf hardware (COTS) On-demand scaling with Network Function Virtualization (NFV), which allows for use of network capacity based on the mobile users behavior An extensible platform that allows for easy introduction of new technologies such as easy network access selection with Access Network Discovery Selection Function (ANDSF) and Hotspot 2.0 MVNO Market Differentiation Examples One company, K-Opticom, targets its existing customer base of fixed broadband users with a bundled package upgrade that includes Mobile Services for 4G Data and Voice (Figure 3). Figure 3. K-Opticom Another MVNO is targeting the machine-to-machine (M2M) market with investments in MVNO infrastructure and technology partnership with Aeris Communications, an M2M application provider (Figure 4). Figure 4. MVNO in Partnership with Aeris Technology Company 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 3 of 13

4 A third MVNO entering the market has implemented a strategy of partnering with an OTT player to provide quality service on OTT applications, including OTT services such as voice-quality OTT voice for applications such as Skype (Figure 5). Figure 5. MVNO Partnering with OTT Player MVNE Platform Figure 6 shows a typical MVNE platform. Figure 6. MVNE Data Center Service for MVNOs The fully virtualized Cisco solution for third- and fourth-generation (3G and 4G, respectively) packet core (vpc) with the Packet Data Network Gateway (P-GW) and Gateway GPRS Support Node (GGSN), Policy Suite for policy, Diameter Signaling Routing (DRA), and charging provides the MVNE with a cost-effective advantage in today s market. Together with NFV on a virtual machine (VM), the Cisco solution allows for activation of resources where the capacity is needed. Within the MVNE, each MVNO has its own virtual instance. Alternatively, each MVNO can be based on a single instance in a multitenancy configuration Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 4 of 13

5 MVNE Use Case Examples Example 1: MVNEs Providing Wholesale Service to MVNOs Use Case In this use case, the MVNE provides services to host a MVNO in its data center and provides all the necessary end-to-end mobility services. Business Requirement As a hosted solution from the MVNE, the MVNO intends to sell prepaid cards and have a signed contract for 10,000 subscriber-identity-module (SIM) cards. The MVNO understands its market segment and signs up for 10,000 SIM cards; the prepaid cards have 3-month validity in Japan and low-cost roaming service. Use Case Description The MVNE provides hosting for the MVNO, and the MVNO has its own dedicated instance for policy and charging; the gateway is also another virtualized instance for this MVNO. The MVNE provides wholesale service as a one-stop shop to enable the MVNO to have: 100 GB per month for all its users, and beyond 100 GB, the usage is tracked and settled on a per-10-gb block Data roaming (rated based on country and preferred operator) The MVNO then provides a prepaid mobile service to its users through: Prepaid SIM cards (real-time charging) Short-code and interactive-voice-response (IVR) recharge and balance query Low-cost roaming to specific countries The Cisco Policy Suite provides rating, charging, balance management, and policy to the MVNO (Figure 7). In addition, an application programming interface (API) allows for easy integration into a portal, Short Message Service (SMS) gateway, or IVR to recharge prepaid SIM cards. Figure 7. Cisco Policy Online Charging System 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 5 of 13

6 The Cisco solution also allows the MVNO to be based on a virtual instance, or it can share the same instance, providing the MVNE with a very-low-cost platform to provide the service as a data center service (Figure 8). The size of the MVNO can start from as small as 1000 users to as large as the operator requires (that is, 200 million or more). Figure 8. MVNO with Its Own Separate Virtualized Packet Core, with Policy and Charging Hosted by an MVNE Cisco Policy Suite also provides a cost advantage for the MVNO by having policy charging and online charging functions integrated in the platform, as shown in Figure 9. In addition, further processing of billing information can be performed using simplified CSV formatted records. As a result the web services API, which is a part of Cisco Policy Suite, can provide flexible provisioning, subscriber queries, and OTT triggering for the MVNO to access additional information Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 6 of 13

7 Figure 9. Simplified Upper-Layer OSS Interfaces Clearly, the MVNE can provide the infrastructure, connectivity, and applications as a one-stop shop to a MVNO. In addition to the business model mentioned previously, following are a few additional examples of what an MNVE might decide to provide to MVNOs: SIM cards Mobile data and voice Mobile roaming API exchange for OTT use case (mobile) Quality of service (QoS), end-to-end if applicable Data center Global roaming exchange Example 2: Multitenant MVNE In this example, the MVNE provides services for multiple MVNOs with different business models. As Figure 10 shows, the MVNE can provide different business models with unique charging models for the business requirements of each MVNO. In the figure, the three MVNOs have reflected these business models: MVNO 1: Sells prepaid data services to its subscribers MVNO 2: Sells Multi-SIM Service - local rates in three countries MVNO 3: Sells low-cost data roaming service 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 7 of 13

8 Figure 10. MVNOs Are Logically Separated and Hosted by an MVNE It should be noted that MVNO customers are not limited to operators. They can also be enterprises that want to provide mobile services to their users. Within enterprises, IT can provide a high level of control and cost advantage by integrating mobile services with their enterprise applications as MVNOs. MVNO Use Case Example for an Operator Connected Vehicles (Machine-to-Machine) In this example, the MVNO offers a vehicle manufacturer an end-to-end solution that incorporates mobile connectivity for its new car models. Business Requirement Many vehicle manufacturers today are introducing mobile M2M connectivity in new car models. Some examples include (Figure 11): Electronic control units (ECUs): Information about users driving habits Emergency calls and vehicle maintenance notifications Global Positioning System (GPS) maps In-vehicle Internet access with Wi-Fi hotspot tethering 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 8 of 13

9 Figure 11. Network Architecture Use Case Description The Cisco MVNO solution allows for a secure tunnel from the MVNO to the M2M providers. In addition, mobility enables the operator to provide a host of use cases for vehicles with SIM cards, including: Redirection to portals; for example, when the control panel starts the browser, users are directed to the car manufacturer s site first before they can start surfing Quota: Charging and enforcement Excess coverage quota and charging Radio access-type policies Time-based policies Different QoS for different vehicle models Group usage monitoring services Application-based usage restriction and control MVNO Enterprise-Focused Use Cases Use Case In this case, the MVNO provides an end-to-end solution to enterprises for their users ease of access to enterprise services and basic mobile services. Business Requirement In addition to mobile services, enterprises need a direct, secure tunnel for their users without the need for a VPN to give clients access to corporate services. Figure 12 shows that enterprises can use that secure tunnel established between MVNO and the enterprise Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 9 of 13

10 Figure 12. Network Architecture for Enterprise Use Cases Use Case Description The Cisco gateway for the MVNOs, which includes Policy Suite and the packet core, allows for a secure tunnel directly to corporations. Possible use cases include: Corporate bundled quota Application-based usage restriction and control Roaming packages; for example: Free access to corporation applications when roaming Free access to Google Maps Free access to enterprise messaging systems such as the Jabber messaging integration platform MVNO OTT Use Cases Voice-over-IP OTT Use Case In this use case, the MVNO s strategy is to partner with an OTT player such as a voice-over-ip (VoIP) company to differentiate the company from its competitors. Business Requirement MVNOs must to be able to provide QoS on OTT voice and messaging applications in order to differentiate themselves. To do so, QoS can be based on application-detection mechanisms and API triggers from the OTT application. Use Case Description When an OTT application is detected or a trigger is received from the OTT application, the MVNO provides a higher QoS, either at the session level or service-flow level, as shown in Figure Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 10 of 13

11 Figure 13. Network Architecture for MVNO OTT Use Cases In addition to direct QoS use cases, other cases can be implemented, including: Voice-level QoS when user is using OTT application for free voice calls Zero rate for data usage used for OTT applications on 3G or 4G networks Voice over Wi-Fi Access Network Discovery Selection Function (ANDSF) Auto Wi-Fi selection for MVNO s Wi-Fi partner or MVNO s own Wi-Fi infrastructure Offload from 3G or 4G to Wi-Fi when user gets good QoS from Wi-Fi (both uplink and downlink) OTT Gift Transfer Use Case Another MVNO use case with OTT applications is the opportunity to set up a mobile service wallet, as shown in Figure 14. The figure shows an example of an OTT application transferring a 500-MB gift to another user. Figure 14. OTT Application Transfers 500-MB Gift to Another User 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 11 of 13

12 Business Requirement A mobile service wallet allows users to transfer megabytes from their quota as gifts to other OTT users from the same MVNO. Figure 15 shows an example of an OTT application transferring a $20 gift to another user. Figure 15. OTT Application Transferring $20 Gift to Another User Use Case Description Using APIs and Secure HTTP (HTTPS)-based message exchange, you can transfer gifts in the form of monetary value directly from the mobile wallet using the OTT application. API Exchange MVNO Use Case In this use case, the MVNO serves as the API exchange for the OTT vendors and other applications to control the QoS of the session during the duration of the application being used. Business Requirement To further enhance the OTT strategy of MVNOs, the MVNO partners with the OTT player with a platform that allows the OTT application to send messages in easy HTTPS format so that it can intelligently exchange messages, as shown in Figure 16. Figure 16. Network Architecture for API Exchange 2014 Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 12 of 13

13 Use Case Description The Cisco Policy Suite Application Gateway allows the MVNO to open the interface to OTT exchange messages. The web services interface allows for fast and easy exchange of HTTP messages between the OTT application and MVNO. Here are some possible use cases: Voice-quality QoS is based on session-start and session-end triggers to the Cisco Application Gateway. Users who are on a lower-tier plan are given a higher QoS when they are accessing a video service such as Netflix. Revenue can be shared between the OTT application provider and the MVNO. Conclusion In today s growing mobile market, new MVNEs and MVNOs in the form of mobile operators, enterprises, and OTT players have found new ways to open monetization opportunities and create new business models. Using the Cisco mobile network infrastructure equipment, including Cisco Virtual Packet Core and Cisco Policy Suite, MVNE counterparts can quickly roll out new services with a very low operating cost. At the same time, their MVNO counterparts find they can differentiate themselves to gain market share and grow profitably. Printed in USA C / Cisco and/or its affiliates. All rights reserved. This document is Cisco Public Information. Page 13 of 13

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