A mobile virtual network operator (MVNO), or mobile other licensed operator (MOLO), is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. An MVNO may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler (MVNE).
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History
MVNO agreements with network operators date back to the 1990s, when the European telecom market saw market liberalization, new regulatory frameworks, better 2G network technology, and a subsequent jump in wireless subscriber numbers. Though the new 2G networks more efficiently managed the limited frequency bands allocated to wireless service, new mobile entrants were still limited by their ability to access frequency bands in a restricted spectrum.
With European markets newly open to competition and new technology enabling better service and cheaper handsets, there was a massive surge in demand for cellular phones. In the midst of this swell, Sense Communications fought for access to mobile network operator (MNO) spectrum in Scandinavia in 1997. Sense was able to establish an MVNO agreement with Sonera in Finland, but it failed to persuade mobile network operators (MNO) in Sweden, Denmark, and Norway. Sense appealed to EU regulators, citing provisions that required certain mobile network operators (MNO) to allow new entrants interconnection; however, Sense's claim was denied.
Despite Sense's failure, the regulator in Denmark saw the promise in the MVNO model as a cost-effective route for telecom companies to enter the market and in May 2000, legislation passed that required network operators with Significant Market Power (SMP), to open up access to their infrastructure. By August of that same year, the mobile network operator (MNO) SONOFON had solidified the first viable MNVO agreement with Tele2. This agreement provided Tele2 with access to SONOFON's network for both mobile and roaming services, the latter of which had been requested by Sense Communications (and denied). With the new regulations in place, MVNOs in Scandinavia eventually grew to a market share of above 10%.
In November 1999, Telia/Telenor Mobile signed a service provider agreement with Sense Communications for GSM network capacity access, allowing Sense to offer services to its own customers in Sweden and Norway.
By 2008, US wireless subscribers had a choice between around 40 MVNOs. According to the FCC, approximately 7 percent of all U.S. mobile subscribers were served by resellers, including MVNOs, and analysts find that the 15.1 million wireless subscribers (end of year 2006) served by resellers has increased by 1.6 million over the previous year.
Types
MVNOs are distinguished by their commitment to owning and managing the operational components of the MVNO business model. The main operational components of the MVNO model consist of:
Because MVNOs are effectively defined by their lack of spectrum licenses, an MVNO necessarily will need to have agreements in place to access the network of at least one MNO. The type of MVNO is determined by how "thick" or "thin" of a technological layer an MVNO adds over its access to its host MNO's network.
Branded reseller
Sometimes referred to as a "Skinny MVNO", as the reseller almost totally relies on the MNO's facilities. They do not own any network elements, but may own and operate their own customer care, marketing, and sales operations.
Service Provider
Sometimes referred to as a "Light MVNO". The service provider operates its own customer support, marketing, sales and distribution operations, and has the ability to set its tariffs independently from the retail prices set by the MNO.
Enhanced Service Provider
Sometimes referred to as a "Thick MVNO". The MVNO manages a more complete technical implementations with its own infrastructure which allows the MVNO more control over its offerings. These MVNOs have a heavier focus on branding, customer-ownership, and differentiation through added services like data and SIM applications.
Full MVNO
These MVNOs have a network implementation operating essentially the same technology as a mobile network operator. Full MVNOs only lack their own radio networks.
Around the world
As of June 2014, 943 MVNOs and 255 MNO sub-brands were active worldwide. This represents a total of almost 1,200 mobile service providers worldwide hosted by MNOs, up from 1,036 in 2012,
According to GSMA Intelligence, between June 2010 and June 2015, the number of MVNOs worldwide increased by 70 percent, reaching 1,017 in June 2015. The report further noted that the 10 countries with the largest number of MVNOs in June 2015, was Germany with 129 MVNOs, the U.S. with 108, the UK 76, the Netherlands 56, France 49, Australia 43, Denmark 43, Spain 35, Poland 27, and Belgium with 26.
In addition to traditional cellular voice and messaging services, in 2014, 120 MVNOs also were offering mobile broadband services. In Africa, Uganda has registered three MVNOs so far, some having their own network infrastructure within major cities, but acting as an MVNO out of these cities.
MVNOs target both the consumer and enterprise markets. The majority of MVNOs are consumer-focused and most have a focus on price as their selling point; customers of major carriers spend about 3.4 times as much money on their service as MVNO customers.
United States
There are about 300 MVNOs operating in the U.S., and they are estimated to make up about 1 in 10 wireless subscriptions, or about 36 million. That number has roughly doubled since 2009, thanks to a trend of the big networks allowing customers to more easily switch networks and a significant decrease in the cost of wholesale network capacity rates. MVNOs have tended to receive better customer service marks in the U.S. than the big carriers, with Consumer Cellular, Ting, and Republic Wireless topping Consumer Reports' industry customer service satisfaction rankings.
To better compete with MVNOs, which often tend to offer service at lower rates than those offered by major US wireless networks directly, some major US carriers also market wireless service using their own captive MVNOs or alternative brands such as Boost Mobile (Sprint), Cricket Wireless (AT&T) and MetroPCS (T-Mobile US). Other notable MVNOs offering lower rates are ChatSIM, US Mobile, RedPocket and TracFone.
Regulation
In 2003, the European Commission issued a recommendation to national telecom regulators (NRAs) to examine the competitiveness of the market for wholesale access and call origination on public mobile telephone networks. The study resulted in new regulations from NRAs in several countries, including Ireland and France forcing operators to open up their network to MVNOs.
Jordan's TRC issued its first MVNO regulations in 2008 facilitating the entrance of the first MVNO in the Arab world in 2010.
The Saudi government is making preparations to permit MVNO services in the country, and local mobile network operator, Mobily has awarded an MVNE management contract to India’s XIUS.
In Brazil, the MVNO was regulated by Anatel, the Brazilian Agency of Telecommunications, in November 2010. As of September 2014 the combined market share of all Brazilian MVNOs was just 0.04%.
In Thailand, five MVNOs were given a Type II license to operate as MVNOs on the 2100 MHz 3G network of state telecom operator TOT Public Company Limited (TOT) in 2009. As of December 2014 three of the original five MVNOs are still in service.
In India, the Telecom Department under the Ministry of Communications and Information Technology, accepted a recommendation from the national telecom regulator, Telecom Regulatory Authority of India (TRAI), to permit VNOs in the country, and announced the grant of Unified license for Virtual Network Operators on 31 May 2016.