By definition, mobile network operators, also known as MNOs, own their network infrastructure and possess licensed radio spectrum. Verizon Wireless, AT&T, T-Mobile, and Sprint are the main MNOs in the United States. For the most part, other companies cannot afford to build their own networks, because building a network requires large amounts of capital and vigorous efforts. MNOs have been known to sell the rights to use their networks to smaller companies, though. These are called mobile virtual network operators (MVNOs). MVNOs pay varying fees to MNOs to use their networks; they are often prepaid networks. Find out more about MVNOs and compare the top MVNO plans here at Wirefly by checking out the chart below.
MVNOs pay for network access and then act as resellers from there. They then sell plans to consumers that piggyback off the network of one or more MNO. Most MVNOs are prepaid wireless carriers in the United States. Three of the four major wireless carriers operate their own prepaid brands, which technically fall under the umbrella of MVNOs. Interested in learning more about MVNOs? Check out: What is an MVNO?
MVNOs From The Major Wireless Carriers
Sprint currently owns Virgin Mobile, a popular MVNO. Verizon operates its own prepaid service, although it's part of Verizon rather than separate. AT&T owns Cricket Wireless, and T-Mobile operates MetroPCS. Dozens of other MVNOs exist today, and they all purchase rights to use the networks of the major carriers. At this point, the average MVNO runs on AT&T or T-Mobile's network due to the popularity of GSM networks. A handful of operators have opted for Verizon and Sprint's CDMA network instead. You can compare wireless plans from the major carriers at Wirefly.
Why Become An MVNO?
Companies become mobile virtual network operators because of its cost-effective nature. A hopeful MVNO could spend a few million dollars to start a prepaid wireless service. On the other hand, the cost of creating a network from scratch would amount to billions. It makes far more sense for hopeful wireless services to piggyback off existing networks rather than attempting to build their own. The sheer cost of building a network, or even expanding an existing one, is a gigantic challenge, and even MNOs know this fact.
Perhaps most important of all: MVNOs are profitable businesses with relatively low costs.
MVNOs Lean Toward MNO Customers, Not Direct Competitors
It probably seems like MVNOs are direct competitors to MNOs, but that's not the case. A better description of this situation is a business relationship. For a given pairing, the MVNO pays wholesale for network usage and then sells that usage to consumers by itself. MVNOs are customers to the major wireless carriers, and both companies earn revenue through this relationship. Mobile virtual network operators are free to set their own plan prices with certain limitations negotiated by the MNO for each contract.
In that vein, MVNOs tend to undercut mobile network operators to attract more customers. They cannot go crazy and charge rock bottom prices, though. A contract between MVNO and MNO would set specific terms on what rates can be charged to consumers. MVNOs are free to charge lower rates than MNOs, but contracts prevent things from getting out of control. Then again, other limitations apply to MVNOs, whether due to mobile network operator restrictions or by MVNO decision. These limitations may matter to consumers.
Restrictions Faced By The Consumer
Millions of Americans receive monthly wireless service from a mobile virtual network operator. These days, certain limitations apply to MVNOs that don't apply to MNOs. Quite a few MVNOs limit the download speeds of their subscribers. MetroPCS limits download speeds to 8 Mbit/s, and T-Mobile subscriber traffic is prioritized over MetroPCS traffic. Cricket Wireless limits speeds to the same 8 Mbit/s, a limitation that AT&T users don't experience. For most users, such limitations don't make a huge difference.
Since MVNOs tend to charge low rates, most people consider such restrictions a compromise. If a person can save $50 per month, then these limitations are much more palatable. Power users that prefer the fastest speeds possible might not accept limitations to data speeds, though. Likewise, users might desire the full features and power of a mobile network operator rather than an MVNO. Plenty of people are willing to pay for the service they want without compromise and without restriction.
Consumers: How To Choose The Right MVNO
Two reasons tend to explain why consumers opt for MVNOs instead of MNOs. First, those with bad credit often can't secure service from wireless carriers. Since MVNOs are almost always prepaid carriers, no credit check is required for service. Consumers in this situation have no other option for acquiring wireless service. Second, MVNOs tend to provide the most value for consumers on a budget, or that want a lower bill. Some MVNOs offer similar plans to MNOs at a discount that's hard to find elsewhere.
Not all mobile virtual network operators make sense for a consumer. Certain MVNOs don't offer unlimited data plans, and others don't provide calling and texting only plans. Although prices fall within a general range, some MVNOs offer more for what they charge. Then things like network coverage and family plans come into play. All of these factors and plenty of others make each MVNO suitable for different consumers. For that reason, consumers should compare MVNOs before securing service with one of them.
Here are factors that tend to matter most for the average consumer:
Network Coverage And Signal Quality
As previously mentioned, MVNOs essentially piggyback off of MNO networks. Each network features strengths and weaknesses as far as coverage is concerned. Large urban areas tend to feature the strongest coverage, regardless of network. Consumers must choose a network that covers their local area as much as possible. Undoubtedly, signal quality makes a difference, and a weak signal leads to dropped calls or slow data speeds. A quality network is required when choosing an MVNO. Network coverage dictates MVNO options.
Plan Prices and Plan Features
Prices and features for plans are directly related to each other. Consumers need to choose an MVNO with plans that suit their needs. However, they have to take price into consideration at the same time. Each consumer should choose an acceptable price range for themselves and which features they deem mandatory. It's then possible to find plans that meet most or all of these requirements. Nothing beats finding the right plan at an affordable price. In reality, small price differences can make a big difference annually.
Other Considerations For Consumers
Extra features and the fine print matter, too. Therefore, consumers should compare MVNOs on these criteria to make the right choice. MVNOs are starting to offer free or low-cost international roaming in certain countries. This extra benefit is something that certain segments of users deem vital. Otherwise, something like rollover data or bonus data can be the difference maker for consumers. The fine print matters, again, because capped data speeds or miscellaneous restrictions don't work well for every consumer.
MVNOs Make Sense For Countless Consumers
To find the right MVNO, these companies must be compared and contrasted with each other. Consumers can opt for an MVNO in order to save money or take advantage of extra benefits. A better deal is often available through an MVNO compared to an MNO nowadays. Once again, it's important to note that not all consumers find MVNOs suitable. Certain restrictions make them less valuable to certain consumers. MVNOs are generally a fantastic option for consumers, and total subscriber numbers for these companies reveal as much.
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