Telecoms providers: What is an MVNO?

MVNOs are a relatively recent addition to the spectrum of mobile phone operators which appeared in the last decade. Standing for Mobile Virtual Network Operators, this acronym refers to operators which don’t own a physical network of cellular transmitters and antennas, but use that of proper mobile phone carriers. Virtual operators have signed an arrangement with the latter to ease over-capacity or unused traffic capacity to sell it back to their own customers, at a discount.

Cheaper call rates is therefore the main advantage provided by these operators, but not the only one. On the other hand, several disadvantages have to be considered.

Advantages of MVNO

The MVNO model brings many benefits over traditional mobile phone carriers to its users. Cheaper call rates and a “no strings attached” approach mean that such operators are not “just” low-cost alternatives.

Cheaper call rates

Let’s get this straight: MVNOs offer substantial discounts over historical carriers. Savings can be as high as 50% on monthly bills. This is because these operators do not need to build or maintain cellular transmissions equipment, they just rent some large chunks of bandwidth and data management from the leading carriers. Other factors related to their low-cost model, with little investment in infrastructures like shops (most virtual operators don’t have any) or customer service (which is often by e-mail or internet chat only) mean they can offer more competitive rates.

No strings attached

Another fundamental feature of MVNOs is that they do not need their customers to sign binding contracts, as most plans are prepaid. This means that customers can leave whenever they want for a more attractive offer, or if they are not satisfied with the service. This also means that customers may use any mobile phone they like to use the service. Some operators though will also act as “retailers” selling phones to their clients, but these phone will usually not be locked to be used with a single operator, as those pegged to a contract with a traditional carrier always are.

Limitations

However, virtual operators suffer from a few limitations which prospective customers should seriously look into. The most serious ones are related to call quality and roaming.

The MVNO and call quality debate

There is a big debate regarding the actual call quality provided by MVNOs. Although all these operators claim call quality is not inferior to that of traditional carriers, the fact is that these carriers which rent them a bit of their network capacity apply what is called “prioritisation”. This means that the best data packets, the best call quality is kept for use by their own customers. During peak airtime consumption hours, when the network is under stress, customers of virtual operators may suffer from call degradation. But it’s always nearly impossible to know the actual technical conditions of the contracts between these operators and the main carriers, so this can affect customers of some operators much more than those of other virtual operators.

Lack of roaming

Another issue with these virtual operators is that they almost never offer roaming. This might be a problem when users are travelling and need to connect to an overseas local operator to receive phone service, but this can also be an issue at home, where major carriers in fact have agreements with each other to share their networks where there is no proprietary coverage by one of them. MVNOs are usually kept away from these arrangements.