What Happens When a New Mobile Operator Enters the Market?

In many countries, just three or four operators dominate the mobile telecom market. Because launching a new mobile network requires expensive licenses and massive infrastructure investments, competition tends to be limited, and prices stay high.

But what happens when a new player enters the mobile markets? Does it really shake things up? Does it really lead to more competition? Do prices go down?

To answer these questions, I analyzed data from 31 OECD countries between 2008 and 2022, tracking the impact of new mobile network operators (MNOs) on market competition and pricing. The analysis includes nine cases of new entrant market entries observed in the Omdia data (Table 1).

Competition Improves When a New Operator Enters

Over the last decade, the new mobile operators that entered the market in France (Free Mobile, 2012), Italy (Illiad Italy, 2018), and Japan (Rakuten Mobile, 2020) all had a positive impact on market concentration.

We measure market concentration using the Herfindahl-Hirschman Index (HHI). On average, the HHI in these countries declined by about 10–12% after a new operator entered the market.

Read: Measuring Internet Market Competition

Prices Drop, Often Significantly

One of the most direct benefits of competition is lower prices. In mobile telecom, the Average Revenue Per User (ARPU) is often used as a proxy for what customers pay.

My analysis found that ARPU dropped by 17–28% after new entrants entered the market. Interestingly, most of this price drop came not from the new operators but from incumbent operators lowering their prices in response.

This shows that even if new entrants don’t immediately capture a significant market share, their presence still forces others to compete.

Data Gets Cheaper, Voice Stays the Same

Due to the growing popularity of smartphones and streaming, mobile data has become far more critical than traditional voice services. My study finds that data ARPU dropped significantly—by over 35% in some countries—while voice ARPU remained mostly unchanged.

This suggests that new and established providers focus their competition on data plans, not voice minutes.

Smaller Operators Face Greater Pressure

Not all incumbents respond the same way. Larger operators—who often benefit from brand loyalty and bundled services—tend to maintain their customer base more easily. However, smaller incumbents, such as the third-largest provider in each country, experience the most significant pressure to cut prices.

In other words, the entry of a new player shakes up the entire pricing landscape, but the smaller incumbents feel the most impact. For example, in France, following the entry of a new operator, the leading operator Orange saw its ARPU decline by 8%, while the third-largest operator Bouygues Telecom experienced a 25% decrease.

Competition Works

When a new mobile operator enters the market, it forces existing players to lower prices, improve services, and rethink their strategies. Even without gaining significant market share, new entrants create pressure that benefits consumers.

These findings also highlight that mobile data—not voice—is now the core area of competition.

For policymakers, the message is clear: encouraging market entry and reducing barriers can lead to more competitive, fair, and accessible telecom markets. In the age of 5G and beyond, ensuring healthy competition will be key to building inclusive digital economies.

Minhee Kim is a Research Fellow at the Korea Information Society Development Institute (KISDI).

The views expressed by the authors of this blog are their own and do not necessarily reflect the views of the Internet Society.