Mobile virtual network operators, which these days are so prevalent, continue to generate doubts as to what they are or how they differ from other operators. Although it is easy to understand the “MVNOconcept”, when we delve into the different types of MVNO and how they differ from other operators, the matter becomes more complicated.
That’s why we have prepared this article in which we explain the main differences between MVNOs and traditional operators.
What is an MVNO?
The abbreviation MVNO stands for Mobile Virtual Network Operator. This is the name given to mobile telephony operators that do not have their own network infrastructure, but lease the network from other operators, which we will refer to as “traditional operators”.
In Spain there are four operators with their own or traditional network: Movistar, Orange, Vodafone and Yoigo. Therefore, virtual operators can operate under one or more of the coverages offered by these companies by means of commercial agreements.
If you want more information about what an MVNO is and the main virtual operators in Spain, we recommend you to take a look at another of our blog articles.
Differences between virtual and traditional mobile operators
Let’s go straight to the goal of this post, which is to show the main differences that exist between mobile virtual network operators (MVNOs) and mobile operators with their own network (MNOs), which in the case of Spain are the four companies mentioned above.
Differences in network infrastructure.
Both types of operator are related to mobile communications (voice and data). The main characteristic that differentiates the two is the possession of authorization for the use of radio spectrum. Traditional operators have this authorization and operate it through infrastructure providing their customers with end-to-end connection.
By contrast, MVNOS do not have a licence from the administration to use their own radio frequency, so to operate they need to buy or lease part of the spectrum used by MNOs. This enables MVNOs to offer and market voice and data services.
Differences in network access.
Although, in general, both the coverage and access to a specific network are the same for any user, whether a customer of the operator that owns the network or of an MVNO that uses such coverage, there may be some situations in which this does not apply.
First, although these are rare situations, there may be cases of network saturation where bandwidth capacity is compromised. The operator that owns the network (the MNO) can give priority access to its customers over those of the MVNO that leases its infrastructure, in order to ensure a better service.
Secondly, there are cases where the services offered by MVNOs do not match those of the traditional operator, such as access to 5G or roaming services.
Differences in terms of business model.
MVNOs are basically resellers of mobile communication services: they buy voice and data packages from traditional operators and resell them to their customers. Within this system there are different types of MVNOs depending on the services they offer:
- Service provider MVNO (Skinny MVNO): the functions of the service provider MVNO are highly focused on commercial operations, developing its own pricing policy and strategy. Most MVNOs are of this type. In some cases it may have its own customer service, although it does not necessarily have to take care of metering and billing tasks, nor does it have its own SIM cards. They are therefore organizations with a commercial identity that do not have any mobile network elements of their own.
- Enhanced MVNO (Light MVNO/Thin MVNO): the enhanced MVNO occupies an intermediate level between the service provider MVNO and the full MVNO. Unlike the previous case, the enhanced MVNO has part of the network infrastructure, such as its own HLR or subscriber registry, but it does not have the independence that Full MVNOs This enables enhanced MVNOs to be more operationally independent compared to service provider MVNOs, especially in terms of metering, billing and offering value-added services.
- Full MVNOs (Full MVNOs/Thick MVNOs): the full MVNO is characterized by having its own core network, its own switching network and SIM card issuance. As a result, it can operate more independently of the MNO and offer more differentiated services. Since it does not have a concession for the use of the radio spectrum, it cannot be classified as an MNO, although its operations are similar.
The business model of traditional operators is very different due to the heavy investment required for the deployment of facilities, as it includes the acquisition of radio spectrum, purchase and installation of equipment, testing, issuance of SIM cards, as well as all the commercial and customer service work aimed at their own users.
Differences in terms of commercial offerings
Although due to the strong competition in this sector there are many offers of all kinds, in general, mobile virtual network operators offer lower prices, since they are not responsible for maintaining the entire infrastructure network.
In addition to the above, MVNOs are also characterized by being more flexible and modular, providing more facilities for contracting only what people need (reinforcing the idea of offering better deals) and eliminating permanence obligations, etc.
Since MVNOs do not require large network investments, they can afford to target specific niches. For this reason, they are offered in a more focused way to specific markets, with the ability to tailor their services and offers and reach a population that traditional operators do not reach.
At the commercial level, there is another notable difference, this time one that favours the traditional operators. The latter have physical establishments where customers can go to solve any type of issue. In addition, since they have ownership of the network, they have better access to technical troubleshooting, and customer service is usually better with this type of operator.