How MVNOs Can Save You Money on Your Mobile Phone Bill
Consumers in North America are often incorrectly taught that the big carriers are the best choice for mobile service, despite the high costs they sometimes charge for even basic voice and data packages. Another commonly repeated myth is that signing a term contract for two or three years is advantageous because of the subsidies carriers give on the purchase of a new smartphone. This leads many people to miss out on opportunities to save hundreds of dollars on their mobile phone costs every year.
The simplest way to get affordable mobile service is to purchase an unlocked smartphone from an independent retailer and sign up for service from a prepaid provider called a MVNO. You can compare MVNO plans using Wirefly.
What Exactly Are MVNOs?
The definition of MVNO refers to "mobile virtual network operator". The term is applied to smaller service providers who don't have their own network infrastructure, but rather lease out spectrum from the big four carriers and resell it to their customers. This business model results in many advantages for mobile phone users, most notably lower fees for the same type of services offered by the big carriers. A mobile virtual network operator is a mobile network service provider that provides wireless communications services without owning a wireless network infrastructure. A MVNO provides services by using the wireless network infrastructure of a mobile network operator, or MNO. MVNOs and MNOs create contractual business agreements allowing the MVNOs access to the MNO’s wireless network infrastructure at lower costs. Then, mobile virtual network operators independently set competitive retail prices for the network services that they provide for consumers.
Why MVNOs Are an Attractive Alternative to Bigger Providers
No Contract Required
Other cellular companies commonly entice consumers to sign lengthy contracts ranging from one to three years in exchange for a discount on the price of a new smartphone. Some also offer discounts on the cost of the service for the first few months or a free add-on to further pressure new customers into a term contract.
During the term of the contract, you'll essentially be trapped with your provider, even if you're not satisfied with the services they offer or you find a better deal elsewhere. If you want to cancel your service and go with a competitor instead, you'll be charged a cancellation penalty of several hundred dollars.
MVNOs provide prepaid service with no contracts. If ever you want to switch providers, you may do so at any time, without any penalties. Of course, this means you won't get a discount on the latest smartphone. But the plans offered by MVNOs are much less costly, which actually saves you money in the long run. Many MVNOs have a selection of new and refurbished smartphones available for purchase at great prices. You also have the option of just buying a SIM card and using any compatible unlocked phone that you already own.
Lower Prices and Attractive Plans
Using a MVNO can save you a lot of money. Due to the high amount of competition in the prepaid market, MVNOs offer very low prices that are often a fraction of what one of the big carriers would charge for the same service. Many of their plans include elements that you might find attractive, like free call display and voicemail, generous amounts of data, unlimited nationwide calling and texting, plus a whole lot more.
Disadvantages of MVNOs
Possible Lower Call Quality
Some MVNO customers report that call quality may be slightly degraded during periods of peak use. This has led to speculation that MVNOs have lower priority on the network of the carrier they're leasing their network infrastructure from. Some MVNOs flat out deny this and will say it's just a myth. But there are some, like T-Mobile's GoSmart, which specifically say in their fine print that network prioritization exists.
Less Roaming Possibilities
Big cellular carriers rent out each other's network infrastructure across various parts of the country, allowing them to claim they have a network that is much bigger than it truly is. This allows their customers to have access to not only voice, but also data roaming, in most places around the nation.
As MVNOs operate on smaller margins, few of them have the ability to get into data roaming agreements with the big providers. For most users, this won't be a big problem. However, if you frequently have to travel outside of big urban centers, not having access to data roaming could be a problem.
History of MVNOs
Originating in Europe, MVNOs began contracting with MNOs during the 1990s. By the mid-nineties, the European telecom industry experienced new regulatory frameworks, improved 2G technology, market liberalization and a significant surge in wireless subscribers. However, new mobile service providers were constrained by their inability to access a limited spectrum of frequency bands.
In 1997, Sense Communications began the fight for access to the mobile network operator spectrum in Scandinavia. Sense was only able to reach an agreement with one MNO, Sonera, in Finland. Mobile network operators in Norway, Denmark and Sweden refused access. Sense Communications presented their appeal to EU regulators and were denied. Near the end of 1999, Sense contracted with Telia/Telenor Mobile to provide GSM network services for their own customers in Norway and Sweden.
Although Denmark had denied Sense Communications access, the regulator recognized the potential of MVNOs. Legislation requiring MNOs with considerable market power to allow access was passed in May 2000. In less than four months, the mobile network operator SONOFON signed the first official MVNO agreement, in Denmark, with Tele2. Not long after the new regulations were implemented, MVNOs held over 10% of the market share in Scandinavia.
Around forty MVNOs were available to wireless service subscribers in the United States by 2008. The number of subscribers using services provided by mobile virtual network operators has increased by millions in the last decade. Many wireless consumers prefer the reasonably priced, contract-free service options offered by MVNOs.
Categories of MVNOs
Not all MVNOs are created equal. By definition, MVNOs do not hold spectrum licenses. An MVNO must have a contractual agreement with one or more mobile network operators. AT&T, Verizon, Sprint and T-Mobile are the only MNOs in the US, also known as the “Big Four.”
MVNOs can be categorized according their ownership and management of necessary operational components. Operational components consist of basic infrastructure, base stations and transceivers, home location registers, switching centers, service packages and prices, billing methods, customer care, marketing and sales.
There are essentially four different types of mobile virtual network operators. Branded reseller, service provider, enhanced service provider and full MVNO are the four basic categories. A branded reseller relies heavily on the MNO facilities. This type of MVNO does not own any of its own network elements. It might operate its own customer care service and handle its own sales and marketing or it might employ the services of a mobile virtual network enabler, or MVNE. A service provider type of MVNO does operate its own customer care center and manage its own sales, marketing and distribution. An enhanced service provider handles more of its own technical implementations with its own infrastructure. This allows the MVNO to have more control over the service packages it offers. Lacking only its own radio networks, a full MVNO operates almost the same as an MVO.
Along with the popularity of MVNO offerings and services, the number of successful mobile virtual network operators increases globally each year. GSMA Intelligence statistics revealed a 70 percent increase in the number of MVNOs doing business worldwide between June of 2010 and June of 2015. GSMA statistics indicated the top ten countries with the highest number of MVNOs were Germany, the United States, the United Kingdom, the Netherlands, France, Australia, Denmark, Spain, Poland and Belgium, in June of 2015.
According to GSMA Intelligence, at that time, Germany led the pack with 129 MVNOs. The US came in second with 108 MVNOs. Belgium, number ten on the list, had 26 MVNOs offering services to consumers. Coming in close behind Belgium, Japan had 23 MVNOs doing business in June of 2015. Since then, in Uganda, Africa, several MVNOs have registered to provide consumers with mobile network service options. In addition to traditional cellular calling and message services, many of these MVNOs offered mobile broadband services, as well.
Today, thanks to significantly lower rates on wholesale network capacity, there are approximately 300 MVNOs serving customers in the United States. Paying less for access allows the MVNOs to offer a wide variety of wireless service packages at very reasonable prices. Millions of mobile network users are switching to an MVNO due to the enticing affordability and service package options.
The four major carriers, or MNOs, in the United States are AT&T, Verizon, Sprint and T- Mobile. Of course, these companies want a slice of the alternative MVNO pie, as well. Each of these MNOs market wireless network services through their own captive MVNOs. AT&T has Cricket Wireless. Sprint has Boost Mobile. T-Mobile has MetroPCS. Verizon has its own prepaid service package option, too. All MVNOs serving customers in the US have entered into contractual agreements with at least one of the “Big Four.”
There are four major mobile network operators in the United Kingdom, also. The four MNOs are Vodafone, Three, O2 and EE. More than 20 MVNOs have signed business agreements with one or more of the big carriers.
In this age of worldwide interaction and advanced technology, ease of global communications has become an absolute necessity for a vast number of businesses and consumers. To assist in accommodating this demand, some MVNOs have established a worldwide presence. These MVNOs are operating as joint ventures, subsidies or have entered into a brand licensing agreement with the local network providers. Lycamobile, Lebara, Virgin Mobile and Tesco Mobile are a few of the MVNOs currently facilitating global mobile network communications. At last count, Lycamobile was known to be operating in 23 countries, Lebara in nine countries, Virgin Mobile in 12 countries, and Tesco Mobile in five. Based solely on this information, one might reference these globally active virtual providers as the “International Big Four.”
Telecom Regulations Around The World
Since the late 1990s and the early 2000s, countries around the world have been reexamining and revising regulations regarding MNOs and MVNOs. Many telecom regulators are implementing new regulations that force mobile network operators to provide access to MVNOs. Limits and regulations vary from country to country. Worldwide, the majority of commissions and telecom regulators agree that MVNOs meet an ever-increasing demand for accessible, flexible, affordable mobile network communications.
Choosing an MVNO
As stated previously, all MVNOs are not created equal. It is wise to do a bit of research before selecting an MVNO to help ensure satisfactory service. Although all MVNOs must have a contractual agreement with one or more MNOs to access network frequency bands, the plan or package inclusions can vary greatly when comparing service providers.
All mobile virtual network operators do not offer the same features and services with their plans or packages. Some MVNOs limit data speeds or prioritize subscriber traffic, with the MNOs giving priority to their own contracted customers. Some do not offer unlimited plans, multi-line plans or family plans. And, some MVNOs don’t offer different packages, without data, that include calling and texting only.
Signal strength and coverage area are two factors that matter to every mobile network consumer. Rollover data, bonus data, and free or low-cost roaming are important to many subscribers. Affordability must be considered, also. Plan and package prices are set independently by MVNOs.
Learning about the limitations and restrictions, as well as, coverage reliability and number of desirable features provided by an MVNO is vital to selecting the most suitable wireless network service provider. With a plethora of MVNOs available, most consumers are able to choose a network operator that provides satisfactory services. However, since there is no long term contract, if consumers are dissatisfied with their first choice, they are virtually free to choose another MVNO.
MVNOs are the middlemen of the wireless world. They buy wireless spectrum in bulk and resell it to their customers at low prices. This means a plan that would cost you $80 with a big carrier like AT&T might cost just $40 from a MVNO using their network. The downside is that you don't get data roaming and may experience lower call quality or data speeds during periods where the network is highly congested.
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