Did you know it is possible to own a telecommunications company without necessarily owning infrastructure to run it? If you didn’t, now you know (You are welcome.) But how does this work?
Basically, you buy packages from telecom companies in bulk and resell them to your customers at a retail price. In this case, you are referred to as a Mobile Virtual Network Operator. Let’s demystify this technical jargon and break everything down in detail.
What is a Mobile Virtual Network Operator?
A mobile virtual network operator (MVNO) is a communications services provider that does not own the network infrastructure over which it provides services to its customers. It enters into an agreement with a Mobile Network Operator (MNO) to obtain bulk access to services at wholesale rates, then sets retail prices independently.
Basically, an MVNO purchases capacity from an MNO at wholesale costs and resells it to customers at reduced retail costs. This is because they do not have to pay frequency spectrum licenses and they haven’t any infrastructure to create.
MNOs, like Verizon Wireless, T-Mobile, Africell sell to MVNOs as a result of them having an additional capability that is unused. Instead of making losses, they make a tiny profit by offloading capability in bulk at wholesale costs to MVNOs.
MVNOs virtually operate on one or more of the Mobile Network Operator’s networks and use the technology of the MNOs to offer consumers like you and me the exact same coverage but for a cheaper price. Also, they usually supply postpaid plans on a subscription basis. The sales and client service is also handled directly by the MVNO or by one more entity known as the Mobile Virtual Network Enabler (MVNE). These focus on selling and administering mobile services.
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There are many MVNOs in the world. Some operate on only one network while others connect to more than one network offering more choices and coverage options. Smart Telecom, K2 Telecom, Sema Africa, Equitel among others are examples of MVNOs in Africa.
Differences between MVNOs and MNOs
|Mobile Network Operator (MNO)||Mobile Virtual Network Operator (MVNO)|
|An MNO operates from its own radio spectrum and has a license from the government to operate through it.||An MVNO, on the other hand, either owns some or none of the assets and it ends up leasing all of the assets from MNOs.|
|A Mobile Network Operator buys its Network equipment from willing sellers and uses them to set up their own cellular or mobile network.||A Mobile Virtual Network Operator purchases bulk packages at wholesale prices and resells them to customers.|
|MNOS first test equipment to see if they are working and if they are in good condition and carry out maintenance of the infrastructure.||MVNOs, being resellers, do need to test if any equipment or carry out maintenance.|
|MNOs are likely to charge more compared to MVNOs since they have to bear the cost of putting up their own towers and maintaining them.||MVNOs charge less than MNOs.|
In conclusion, MVNOs buy voice and data packages in bulk from the MNO and sell it to their subscribers. Have you used a Mobile Virtual Network Operator before? What was your experience compared to Mobile Network Operators? Share with us in the comments section below.