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Google is the highest profile global technology company from outside the traditional mobile sector to enter the MVNO market. But it is not the first one, and it will certainly not be the last. A number of device vendors – and technology vendors in the device ecosystem – will enter the MVNO market over the next two years to enhance the value of their devices. They will all face the challenge of how to build a global SIM card to access different networks in different countries.

Last week Ovum attended the MVNO World Congress in Nice, France. Although Google was not present at the event, from those that were, it’s clear that Google spent two years piecing together the strategy for its MVNO service, Project Fi.

Although the pricing arrangements between Google, Sprint, and T-Mobile have not been disclosed, Ovum’s research into wholesale pricing trends in the US indicates that there will be a large enough margin for Google to run the service profitably if it achieves good subscriber take-up. We also believe Google will roll out the service in other regions, specifically Europe, which has a mature MVNO sector.

HP is one of the vendors that have already added connectivity to devices. It has been selling tablets with a service called DataPass, an MVNO-based service providing out-of-the-box connectivity in each European market where the SIM card is activated.

Achieving regional and global connectivity is a key challenge for device vendors such as HP and Google. Global SIM, as a concept, is not new to companies working in the MVNO, M2M, or roaming markets. Technically there are many ways to create a global SIM, including a soft SIM, a reprogrammable eSIM, or a SIM that hosts multiple subscriber identities. Commercial issues are more challenging than technical ones; an MVNO with a global SIM still needs to negotiate an MVNO contract in every country to make the SIM card appear local.

An interesting aspect of the Google Fi service is its connectivity to two host operators – Sprint and T-Mobile. Google is not the first company to do this (Virgin Mobile France and NRJ have been operating as full MVNOs on multiple French networks for some time). However, it is the first to offer a service that switches between two different operator networks.

For mobile operators, the global SIM and national roaming capabilities are not such good news. A global SIM will allow SIM cards to be inserted (or embedded) only once at the point of manufacturing. Once these SIM cards are activated, they can switch network connectivity from any network in any country, always achieving the best coverage at the lowest (wholesale) cost.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

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