- MVNOs are Mobile Virtual Network Operators that rely on the infrastructure of MNOs to offer lower-priced services.
- The first MVNO, Virgin Mobile UK, was launched in Europe in 1999, and there are currently 139 MVNOs in the United States.
- MVNOs are important because they offer lower prices, tailored services, and more attainable costs compared to MNOs.
- MVNOs work by buying communication packages from MNOs at wholesale prices and reselling them at cheaper rates.
- There are four types of MVNOs: Branded Reseller, Service Provider, Light MVNO, and Full MVNO.
What on Earth are MVNOs? While it may not be a term you hear often, virtually every mobile carrier in the country falls under the definition of MVNO or “Mobile Virtual Network Operator.” If you’re shopping around for a new phone, you’ve probably encountered MVNOs during your search.
When it comes to phone shopping, quite a bit needs to be considered. Between the company, the style, the features, and the carrier, it can get pretty overwhelming, not to mention expensive.
Luckily, plenty of budget-friendly options exist that don’t force you to sacrifice reliability or even certain features for a more affordable option.
In today’s guide, we’ll dive into what MVNOs are and how they work. At the end, we’ll discuss a few prime examples of some of the best MVNOs. Let’s dive in!
What Are MVNOs?
This is the most important question to start out with. When it comes to cell phone carriers, there are generally two options: MNOs and MVNOs. MNOs are cell phone carriers that operate their own physical network infrastructure; they actually own the cell phone towers and are responsible for their upkeep.
MVNOs, on the other hand, do not operate their own physical network, instead relying on the infrastructure that MNOs have already created in order to offer the same services at lower prices.
History of MVNOs
MVNO stands for Mobile Virtual Network Operator. The “Virtual” part of their name stems from the fact that they have no physical infrastructure themselves and instead rely on Mobile Network Operators, or MNOs, to do the physical tasks and work with them purely from a virtual standpoint.
The very first MVNO, Virgin Mobile UK, was launched in Europe in 1999. The company was a great success and paved the way for nearly 2,000 other MVNOs to exist today.
Many of the original MVNOs existed in Europe first before expanding to other continents, including North America. The United States didn’t see its first MVNO company until 2011! The industry has become quite lucrative since then. Currently, there are 139 MVNOs in the United States alone.
Why Are MVNOs Important?
MVNO carrier companies are often sought after for their lower prices without lacking service. Since they utilize MNO infrastructure without worrying about the upkeep, they can be more focused on their customers. For the most part, this lets them maintain a better reputation for customer service.
While MNO carrier companies thrive, offering more one-size-fits-all options to be able to accommodate the masses, MVNOs tend to be more tailored to individuals offering various perks and features to a targeted audience.
For example, many MVNOs offer better international rates for out-of-country phone calls and text messages compared to their MNO counterparts.
Arguably, the most important aspect of MVNOs existing is their more attainable cost. To give you an idea of the cost difference, you can easily find MVNO company packages for $10-$15 a month, but the absolute cheapest plan with any major MNO company in the United States starts at $60.
We will get into the pros and cons later, but saving $50 a month is a significant draw for many customers. Having access to a cell phone is no longer a luxury. In our interconnected society, they are a necessity. MVNOs make having a cellphone possible for many people. So, how do they do it?
How Exactly Do MVNOs Work?
MVNOs are essentially resellers that buy communication packages from MNO companies at wholesale prices and then market those data and minutes as their own for a much cheaper price than their MNO competitors while still making a profit.
They also don’t have to pay to maintain the physical equipment, a notable reason for the higher prices found in MNOs. Occasionally, MVNO companies may actually own some of the assets the MNO company provides or effectively leases the equipment.
This doesn’t mean they necessarily become responsible for maintaining any of it. But in these cases, they may have a bit more of a stake in the company. MNOs are responsible for the maintenance of all of their physical infrastructure and all of the various licenses required by the government to operate.
Sometimes, the MNO carrier companies will also be responsible for the customer care of their MVNO customer counterparts. But this is entirely up to the MVNO company and how they handle it.
The MNO takes care of the details, and the MVNO brings in more customers. All of it leads to more profit, even if it’s less than they would get from direct customers.
The Four Types of MVNOs
When it comes to MVNO carrier companies, there are actually four different types of business models to be followed. They all have the same basic idea of using an MNO’s infrastructure and creating their own services off of it. But there are slight differences in the details of how things are run.
When using this business model, MVNOs have no assets in the MNO company they are partnered with. They get no ownership of the client, meaning the MNO company is still responsible for all customer service tasks, and they don’t have the ability to set their own prices for their services.
However, they are still able to reap the benefits of owning their own brand and being responsible for their own sales, distribution, and profit.
Service-providing MVNO business models also have no ownership of the infrastructure provided by the MNO company they’re partnered with. But they do get to provide their own customer service and billing platforms.
They have the freedom of setting their own prices and making their own revenue directly from outbound traffic sources. This is a very similar business model to a branded reseller, just with more responsibility and independence when it comes to the customers.
In this model, the MVNOs still do not possess any ownership of the physical infrastructure provided by the MNO company, but they do get ownership of the clients, the intelligent network platforms, and sometimes the value-added services platform.
Their revenue comes from both outbound and inbound traffic. But they are also responsible for the costs associated with branding, sales, marketing, IT platforms, and essentially all the expenses associated with an MNO company, with the exception of licensing and physical infrastructure.
In this final business model, the MVNO is essentially an MNO in all aspects of the business, with the exception of actual ownership of the radio access network. They are able to reap all the benefits of owning a network-switching infrastructure. But they are also responsible for the costs associated with these responsibilities.
They have every responsibility that a light MVNO company would have, with the addition of almost every benefit and responsibility associated with an MNO company. The only exception is the ownership of the physical infrastructure.
Pros and Cons of MVNOs
There are some obvious benefits to utilizing an MVNO carrier over an MNO. But there are a few cons to be aware of as well.
Pros of MVNOs
Perhaps the most obvious pro of MVNO companies is their significantly reduced cost. You can easily find a plan with an MVNO carrier for less than $15 a month, which is a massive step down in price from what you can get with MNO carriers in the United States.
Sure, there are higher prices with various MVNO companies to accommodate for different benefits or additional lines. But even then, the costs are often less than an MNO company’s bare minimum package.
For the MVNOs that have their own customer service providers, they have a reputation for being much more accessible and helpful.
This can stem from a few different aspects of the business, most notably that they tend to have a much more targeted audience and therefore fewer customers compared with a large MNO company such as AT&T or Verizon, so they have more time to dedicate and more specialized help.
Cons of MVNOs
MVNOs tend to have one purpose and one purpose only: to offer you cell phone service and nothing more.
Many of the MNO companies out there, especially the main ones in the US, like Verizon, AT&T, and T-Mobile, have several perks or packages to choose from. For example, you can get internet and phone services for a discounted price on the same plan, or maybe a huge discount on a new iPhone model when you sign up for a plan with them.
There will rarely be any frill with an MVNO plan, you get what you get, and that’s it. This particular con is highly speculative, but worth mentioning. Numerous reports say that MVNO companies’ customers receive less or slower service than their MNO counterparts, especially in busier areas or during peak usage timeframes.
Many will say that this is purely a misconception. A multitude of reasons can cause a reduction in service. Sure, it is true that prioritizing certain customers over others is unlikely since they all use the same infrastructure.
There are several variables at play with this. But frankly, too many to prove this one way or the other. Still, it’s worth taking into consideration.
Examples of MVNOs
There are well over 1,000 MVNO carrier companies worldwide. Very few operate on more than one continent, but we’re going to focus on some of the major MVNO carriers in the US. Bear in mind that this is still just a small handful of the options out there, even within the country.
Things got a little more complicated and a lot bigger a few years ago when T-Mobile and Sprint merged as one company. Mint Mobile is an MVNO carrier that operates under the umbrella of both T-Mobile and Sprint. Because of this, they have a vast range of coverage and usage.
They are one of the best-value MVNO carriers on the market right now and offer a wide range of services, packages, and various other offerings to those on a budget in the US.
Another rather commonly known company, this MVNO operates under Verizon as a popular alternative to the MNO carrier. Straight Talk offers a wide variety of packages, and cell phone plans, and is one of the few MVNOs that offers a few perks on various services when you sign up for them.
They are also one of the few MVNO carrier companies that have easily accessible physical stores for you to walk into, often found inside your local Walmart for in-person assistance.
Consumer Cellular is an MVNO that is partnered with AT&T, the largest MNO carrier in the United States. They also have a wide selection of plans and rates to choose from. They offer great rates for anyone of all ages, but they also offer an extra 5% off for AARP members.
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