What Is Mobile Virtual Network Operator (MVNO)? Working, Services, and Examples
An MVNO rents infrastructure from one or more cellular network carriers to provide competitive mobile connectivity plans.
A mobile virtual network operator is a communications service provider that does not use its own infrastructure to provide connectivity but leases out infrastructure from one or more cellular network carriers to offer a more competitive mobile connectivity plan. This article explains the workings, services, and examples of MVNOs.
Table of Contents
What Is an MVNO?
A mobile virtual network operator is a communications service provider that does not use its own infrastructure to provide connectivity but leases out infrastructure from one or more cellular network carriers to offer a more competitive mobile connectivity plan.
The term mobile virtual network operator (MVNO) refers to a company that sells wireless communication services. MVNOs employ third-party infrastructure, as opposed to traditional mobile network operators (MNOs), who operate their infrastructure. Instead, they rent it from MNOs and use the infrastructure to provide a particular set of services to their markets.
An MVNO obtains minutes or wireless capacity at wholesale rates from a different mobile network operator (MNO) and resells them to customers at lower retail costs under its company name. Several MVNOs rely on a combination, while some employ a variety of networks for their signal.
Sprint, T-Mobile, Verizon, and AT&T are just a few of the carriers that Straight Talk, an MVNO, uses. In such circumstances, someone has likely chosen to join the network that offers the fastest speeds in their area. The networks used by US Cellular, T-Mobile, and what’s left of Sprint are also combined in Google Fi, Google’s wireless service.
One can easily switch between networks to get the best connection if they purchase an optimized phone from the carrier, which is often one of Google’s Pixel handsets. MNOs like Verizon Wireless and T-Mobile decide to sell to MVNOs because the networks have an additional capacity that would otherwise go unused. Even though MVNOs enjoy the same connections, speeds, and benefits as their parent networks, they don’t always enjoy the same level of priority.
For instance, T-Mobile users will always be given preference during peak hours, but customers of Mint Mobile, an MVNO that uses T-network, may experience reduced speeds during peak hours. As a result of their network’s absence, they can provide better, more affordable cell phone plans, drastically lowering the price. MVNOs purchase bulk access to an MNO’s services at reduced or wholesale prices and set retail prices for selling to customers.
Tesco Mobile is an example of an MVNO. As an MVNO, it provides data, call plans, and mobile phones. Utilizing the mobile network infrastructure of O2, Tesco Mobile can operate as an MVNO. By unloading capacity in large quantities at wholesale rates, the MNO turns a tiny profit instead of suffering a loss.
Understanding MVNO operations
Because they do not have to pay for radio frequency spectrum licenses and do not need to build or maintain any infrastructure, MVNOs can afford to mark down their retail costs to a certain level. MVNOs can spend much on marketing since they have cheap overhead, which increases their chances of selling minutes to customers. MVNOs primarily offer prepaid wireless plans on a subscription basis.
The MVNO or another organization known as a mobile virtual network enabler (MVNE) may handle sales and customer care directly. MVNEs are experts in promoting and managing mobile services. Many phone plans are available from MVNOs, and some minor carriers even let people create their own plans.
Although most MVNOs do not provide as many plan features as the majors (streaming, travel, etc.), they make up for it by frequently offering deals or specials on their plans, making MVNOs an even more attractive choice for customers on a tight budget. On the other hand, postpaid phone plans, the conventional kind of plan that most people are undoubtedly used to, are paid for at the end of the month after “consumption.” The phrase is used to describe several agreements with a mobile network operator.
Companies that provide mobile services under a specific brand are at one end of the spectrum, with their marketing and tariff plans typically implemented using a sophisticated CRM system. On the other end are organizations that, in addition to their goods, issue their own SIM cards and have their core network infrastructures.
The majority of MVNOs offer an excellent selection of handsets. Still, many also work with third-party financiers like Affirm or SmartPay to provide their consumers with monthly payment plans. Interest rates of up to 30% may apply to some payment plans for electronic devices. Most MVNOs enable people to bring their own device if they do not require a new phone as long as it is unlocked and functional with their network.
How Do MVNOs Work?
Simply put, MVNOs purchase phone and data packages in bulk from the MNO and then market them to their users. On average, users only use part of the package they receive, such as 1000 SMS/Voice minutes and 1GB of data. The MVNOs buy and sell plans based on this fact. Some MVNOs can be so small and narrowly focused that MNOs might not be eager to work with them.
In this scenario, they would visit an aggregator (MVNA) and purchase the wholesale voice, SMS, and data packages from them. Some MNOs develop a unique arm known as an enabler (MVNE) from which MVNOs and MVNAs can obtain services. A mobile service’s production and supply chain is now owned and managed by all MNOs, as is the case with most new products and services at first.
However, as the market matures and demand diversifies, buying wholesale becomes ideal for a manufacturer to maximize ROI. Usually, this stage comes right after critical mass has been attained. Mobile is, therefore, unique because critical mass has already been achieved in most markets. Yet, MNOs, even though almost all of them are under shareholder scrutiny, are still not utilizing the wholesale model to maximize their ROI, even though this has, in some cases, been a sizable investment.
The fact that wholesale is one of the oldest and most mutually successful business models in use should also be kept in mind at this time. It’s not necessary to reinvent the wheel for mobile. This is exactly what some early MVNOs and MVNO strategists did by failing to see the MVNO as a mutually lucrative endeavor and presuming that the MVNO needed to go deeply into the mobile network to differentiate a service.
Because of this, the early MVNO models of the CDMA era were too expensive and complex to be lucrative for both parties. They also had too much overlap. Next-generation MVNOs are finally realizing an MVNO model that’s profitable for both the MNO and MVNO and is mutually beneficial. A network should never be the driving force behind an MVNO because it’s a company.
The entire point of wholesale is the resale of excess capacity; to add capacity would be to completely misunderstand the fundamental ideas underlying the wholesale and virtual models and would also be to grossly underestimate the complexity, cost, and overheads involved in maintaining a mobile network.
Existing fixed or other operators fall victim to this trap the quickest. Comparing wholesale DSL, fixed, and other telecoms models to wholesale mobile reveals how much more complex they are. The process of running an MVNO differs significantly from that of an MNO. To successfully operate an MVNO, it is vital to keep expenses to a minimum.
Mobile, and by extension MVNO, differs significantly from other wholesale and telecom models in that an MNO or MVNO owns and operates highly sophisticated and pricey consumer equipment (handset and SIM). In the world of DSL, this would be the equivalent of the DSL provider not only providing a DSL line and a wireless modem/router.
One can always appreciate the importance of mobile because operating an MVNO is significantly different from running a fixed network where, usually speaking, one is not in charge of the entire end-user process. Running an MVNO is very different from running an MNO; people need a small group of individuals familiar with the whole procedure and service because the MVNO model does not permit delegation to large numbers of employees. The host MNO does not support the MVNO delegating this to its staff.
See More: LTE vs. 4G: Understanding The 8 Key Differences
Three criteria are commonly used to classify MVNOs:
1. Branded reseller MVNOs
These MVNOs use predetermined settings, prices, and packages from current service providers (MNOs, MVNOs, MVNEs, etc.) and resell them under their names. Businesses can set up branded resellers more quickly and affordably because they employ premade settings. As a result, they are free to concentrate on things like sales, marketing, and relationship-building.
2. Enhanced service providers and light MVNOs
Light MVNOs also give host operators operational control over network services (MNOs, MVNOs, MVNEs, etc.). When it comes to defining their services, packages, tariffs, and plans, Light MVNOs are more adaptable than branded resellers. Additionally, whereas Light MVNOs purchase core network and radio access from host networks, they maintain ownership of everything else. Applications and service management, rating and billing, customer service, and sales and marketing are all included in this.
3. Full MVNOs and full infrastructure MVNOs
Full MVNOs offer the greatest degree of flexibility. They manage several key network components, but host networks are still in charge of radio access. Full MVNOs typically set up, maintain, and operate their own SIM cards, call flows, SMS flows, and data flows, in addition to managing their basic network components and infrastructure.
See More: What Is Network Topology? Definition, Types With Diagrams, and Selection Best Practices for 2022
MVNO Services
Mobile Virtual Network Operators offer the following connectivity services:
1. Voice services
To provide their services, MVNOs (Mobile Virtual Network Operators) rent the infrastructure of a typical mobile network operator. MVNOs are communication service providers. A voice service routes vocal communications through digital channels using the internet and an IP network.
VoIP (voice over internet protocol) and VaaS (voice as a service) are other names for these services. Voice Communications are provided by MVNOs and include real-time, two-way voice services, fax services, various calling and call management telephonic services, and more. People may get connectivity solutions from the top integrated MVNO network service providers worldwide.
2. SMS services
Most telephone, Internet, and mobile device systems have a text messaging service called Short Message/Messaging Service, which is frequently abbreviated as SMS. Mobile virtual network operators (MVNOs) are service providers for mobile communications providers who have their clientele but not their telecom infrastructure.
They rent and utilize the network of a mobile telecom provider to provide these services. An MVNO, unlike a traditional wireless carrier, does not possess the Base Station Subsystem (BSS) that Mobile Network Operators (MNO) have. As a result, MVNOs outperform MNOs in terms of customer satisfaction since they can fully concentrate on serving their consumers.
3. MMS services
A mobile phone’s cellular network supports the Multimedia Messaging Service (MMS), a common method for sending and receiving messages with multimedia content. Users have access to far more characters in MMS messages, giving them the virtually infinite capacity to enter messages and send other media types.
As communication service providers, MVNOs (Mobile Virtual Network Operators) rely on MNOs’ (Mobile Network Operators’) capacity to supply services rather than operating their infrastructure. The proper partners for each location allow MVNOs to meet connectivity needs. These plans seem more efficient than standard mobile plans for browsing the internet.
4. Data services
For frequent travelers and distant employees without access to a physical internet connection, mobile virtual network operators (MVNOs) can provide unlimited data. MVNOs can provide unlimited data by combining their local purchase agreements with, for instance, fiber network providers, ISPs, MNOs, local MVNOs, and even satellite firms.
The increasing number of devices connected to the network and each other creates opportunities for new enterprises at any point along the value chain. MVNOs provide partner and reseller services, worldwide coverage, white-label solutions, and core competencies. An MVNO offers a more individualized service better suited for the customer.
5. Broadband services
A Mobile Virtual Network Operator sells mobile services using the network of a licensed mobile operator even though it does not have its mobile spectrum license. Broadband refers to high-bandwidth data transmission that carries both Internet traffic and various signals at various frequencies.
It frequently describes constant, high-speed Internet access that is quicker than older dial-up access. Broadband covers several high-speed transmission methods, including Digital Subscriber Line (DSL), cable modem, fiber, Wi-Fi 5 or 6, satellite, and Broadband over Powerlines (BPL). It enables information to be transmitted quickly to one’s desktop computer, laptop, tablet, smartphone, smart TV, or another web-enabled device.
See More: GSM vs. CDMA: Understanding the 10 Key Differences
Examples of MVNOs
Now that we know how MVNOs work and the services they provide, let us look at a few examples of Mobile Virtual Network Operators:
1. Metro by T-Mobile
There are no other lean MVNOs on this list but this one. Highlighting how crucial marketing is to an operator, Metro by T-Mobile is pertinent. Despite not owning any network components, Metro manages its own client database and has sales and customer service divisions. In 2019, Metro’s wide range of handsets with only four data plans distinguished it from other mobile carriers.
In terms of unlimited data packages, they’re recognized as the top MVNO. Additional subscriptions to Google One or Amazon Prime are included in some service packages. On some plans, Metro by T-Mobile provides extra benefits.
2. Consumer Cellular
When Consumer Cellular was first established in 1995, it set out to provide affordable telecom services to customers of all ages. They mainly targeted the older market segment when discussing phone options. In 2018, the business expanded beyond smartphones when it introduced the GrandPad, an elderly-friendly tablet with simple controls.
Consumer Cellular, one of the top MVNO providers, reached 3.5 million users in 2019. A fantastic option for senior cell phone plans is Consumer Cellular, which offers a wide range of plans. An additional 5% off a plan is available if someone’s an AARP member, providing very affordable deals.
3. Google Fi
Google Fi uses a mix of Wi-Fi hotspots and Sprint, T-Mobile, and U.S. Cellular networks for service. It is among the most cutting-edge and user-friendly MVNOs out there. While unlimited plans begin at $50 for a single line, flexible plans start at $20, where people pay for the data they use.
Data is a fixed $10 for 1GB of 5G LTE, but people only pay for what they use. According to the company’s bill protection function, one won’t be responsible for any more data charges once they reach 6GB. When data usage exceeds the threshold, it is throttled.
4. Access Wireless
To guarantee that low-income clients may access dependable telecommunications services at fair and affordable prices, the Lifeline Assistance program was created. Customers who meet the requirements for the program are given a free voice, text, and data allowance, and based on state-specific restrictions, they may also get a free mobile phone.
Lack of prioritizing, however, is the major problem. This implies that during periods of high traffic, Access Wireless frequently experiences a slowdown in its data speeds as the primary network operator (like T-Mobile) prioritizes the data speeds of its customers.
5. Mint Mobile
While many MVNOs operate under the merged T-Mobile and Sprint banner, Mint Mobile offers some of the best overall pricing. Mint is one of T-better Mobile’s value options, offering a variety of prepaid plans with data allowances ranging from 4GB to unlimited, as well as several excellent phone bargains.
Users can try out Mint Mobile’s service without a long-term commitment, which is popular. Before signing up for a year or longer, one can try out Mint Mobile’s service with a three-month contract. The monthly fee is $15 for 4 GB of data, $20 for 10 GB, and $25 for 15 GB.
See More: What Is Wifi 6? Meaning, Speed, Features, and Benefits
Takeaway
MVNOs have long been a staple in the connectivity landscape of developed economies. Now, it is getting a new lease of life with the rise of the Internet of Things (IoT). IoT requires a unique set of services that is difficult to purchase or build outright. As a result, the MVNO business model remains highly relevant, adapting to new consumer and enterprise needs.
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