USA MVNO Market Outlook to 2028

USA MVNO Market Overview

• The USA MVNO market is valued at USD 13 billion. The market has been driven by increasing consumer demand for affordable wireless services, particularly in the prepaid sector, as well as growing partnerships between Mobile Virtual Network Operators (MVNOs) and Mobile Network Operators (MNOs) such as Verizon, AT&T, and T-Mobile. Over the past five years, MVNOs have capitalized on evolving consumer preferences for flexible, no-contract mobile plans, as well as the increasing penetration of smartphones and digital platforms, enhancing market growth.
• Major cities such as New York, Los Angeles, and Chicago dominate the USA MVNO market. These cities are marked by their large, diverse populations, high mobile penetration rates, and strong consumer demand for affordable mobile services. The concentration of tech-savvy users and the presence of significant immigrant communities in these areas also support niche MVNOs targeting specific demographics. Furthermore, the highly competitive nature of the wireless market in these metropolitan areas pushes MVNOs to innovate and provide tailored services to meet varying consumer needs.
• The Federal Communications Commission (FCC) continues to play a pivotal role in regulating the MVNO market, especially in terms of spectrum and network sharing. In 2023, the FCC introduced guidelines that encourage better network sharing agreements between MNOs and MVNOs, improving access to 5G networks. These regulations aim to promote competition while ensuring fair access to spectrum resources, which are critical for MVNOs to operate effectively. As of 2024, approximately 70% of MVNOs benefit from spectrum-sharing agreements mandated by FCC rulings.

USA MVNO Market Segmentation

• By Operational Model: The USA MVNO market is segmented by operational model into Full MVNO, Service Operator MVNO, Branded Reseller MVNO, and Hybrid MVNO. The Full MVNO model dominates the market due to its greater control over the mobile services provided. Full MVNOs operate independently from their host network operators by managing their own infrastructure, giving them the flexibility to tailor services and pricing to meet the specific needs of their subscribers. This level of independence allows for better customer retention and differentiation, which is why the Full MVNO model is prevalent among large players such as TracFone Wireless.

• By Service Type: The market is further segmented by service type into Prepaid, Postpaid, and Value-Added Services (IoT, M2M, OTT). Prepaid services hold a dominant market share as consumers increasingly seek flexibility in their mobile plans, avoiding long-term commitments. MVNOs such as Boost Mobile and Mint Mobile have thrived by offering low-cost, prepaid services that appeal to budget-conscious customers, especially those from lower-income brackets and transient populations. These prepaid offerings are enhanced by competitive pricing strategies and the simplicity of pay-as-you-go plans.

USA MVNO Competitive Landscape

The USA MVNO market is dominated by several key players, each leveraging their unique market positioning, partnerships, and service offerings. The market is highly competitive, with established players like TracFone Wireless leading the market, alongside rapidly growing newcomers such as Mint Mobile. These players compete by focusing on niche markets, low-cost offerings, and innovative digital services to attract and retain customers.

USA MVNO Industry Analysis

Market Growth Drivers

• Increasing Demand for Low-Cost Services: The USA's economic growth slowed to 2.1% in Q2 2024, per the Bureau of Economic Analysis (BEA), contributing to a rise in consumer demand for budget-friendly mobile services. Mobile Virtual Network Operators (MVNOs) offer lower-cost services, which resonate with customers seeking affordable alternatives amidst inflationary pressures, especially among lower-income households. With the median household income in the US at $74,580 in 2023, MVNOs cater to the 29% of households earning below $50,000. This has led to a 1.5 million increase in prepaid mobile subscribers in 2024.
• Expanding IoT and M2M Solutions: The proliferation of Internet of Things (IoT) and Machine-to-Machine (M2M) solutions is a significant growth driver for MVNOs, particularly as the number of connected devices in the USA reached 16.4 billion in 2023 (FCC). This growth is supported by the adoption of IoT in industries such as healthcare, transportation, and agriculture. The deployment of smart meters, wearable devices, and fleet management systems has opened new avenues for MVNOs, leveraging partnerships with network operators to provide tailored IoT services, particularly for small and medium-sized businesses.
• Rise in Prepaid Subscribers: In 2024, the prepaid mobile market in the USA experienced growth, driven by an increase of 2 million prepaid subscribers due to economic uncertainty and shifting consumer preferences. Households with tighter budgets are increasingly turning to prepaid plans for cost control. The US unemployment rate, reported at 3.7% in August 2024, and inflationary pressures on essential goods contribute to this trend. MVNOs, with flexible, low-commitment prepaid options, are poised to capitalize on this demand.

Market Restraints

• High Customer Acquisition Costs: Despite their low-cost offerings, MVNOs face significant customer acquisition challenges. In 2024, customer acquisition costs (CAC) for MVNOs reached an average of $250 per customer, according to the National Telecommunications and Information Administration (NTIA). This is largely due to the high level of market saturation and the growing investment in digital marketing and customer support infrastructure. The competitive landscape forces MVNOs to increase spending on retention strategies, further inflating acquisition costs.
• Intense Market Competition: As of 2024, there are over 120 MVNOs operating in the US, creating a highly competitive environment. This intense competition is driving down prices, squeezing margins, and making it difficult for new entrants to gain a foothold. Large MNOs, such as AT&T and Verizon, also operate sub-brands in the MVNO space, further intensifying competition. The low barriers to entry allow for a steady influx of new MVNOs, making differentiation a key challenge.

USA MVNO Future Outlook

Over the next five years, the USA MVNO market is expected to witness sustained growth driven by several factors, including increased 5G adoption, the growing popularity of digital-only MVNO models, and the rise of value-added services such as IoT and M2M solutions. MVNOs will also benefit from technological advancements in network sharing and spectrum management, enabling them to offer improved services at lower costs. Furthermore, expanding their market reach into underserved regions and niche customer segments will open up new growth avenues for MVNOs.

Market Opportunities

• IoT Expansion in MVNO Offerings: The Internet of Things (IoT) presents an untapped opportunity for MVNOs. In 2023, the number of IoT-connected devices surpassed 16.4 billion in the US, creating a massive opportunity for MVNOs to offer niche IoT connectivity services. MVNOs can cater to specific industries, such as logistics, healthcare, and agriculture, by providing customized IoT plans. The NTIA expects IoT applications in MVNOs to drive 15% of their total service revenue in the coming years, as businesses increasingly adopt connected technologies.
• eSIM Adoption: eSIM technology is revolutionizing the mobile industry, and MVNOs are capitalizing on this trend to attract more customers. In 2023, there were over 100 million eSIM-enabled devices in the US, according to the GSMA, providing MVNOs an opportunity to offer flexible and seamless network switching services. The increasing adoption of eSIMs in smartphones and IoT devices is expected to enhance customer retention and reduce churn by offering greater convenience for switching between service providers without the need for physical SIM cards.