Questions to Carriers: What is a MVNO?

This week, rumors flooded Twitter with talk about Apple starting its own MVNO. The iPhone creator partnered with mobile carriers back in 2007, but now it seems Apple may have an interest in entering the carrier game itself. While journalists pondered whether Apple is just following Google’s lead into the MVNO market, most consumers are still wondering: what the heck is an MVNO?

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Today, Questions to Carriers is asking what the hell is a MVNO?

MVNO: Mobile Virtual Network Operator

Hmm okay, that still doesn’t mean much to the average consumer. So let’s break it down.

A mobile network is the infrastructure on which our smartphones, tablets and other mobile devices function. The networks are built out of cell towers, each capable of sending signals through the air to our devices which provide the connection for voice, sms and internet. These networks are owned by mobile network operators, i.e. carriers.

Within the U.S. the major network operators are the four main carriers: AT&T, Verizon, Sprint and T-Mobile. With over 300 million citizens in the US, these four carriers can’t reach everyone on their own. By leasing their networks, carriers can make more money without spending extra effort trying to penetrate an untapped market. Another perk… they are reselling unused network capacity that doesn’t really affect their bottom line.

Smaller companies that lease minutes, messages and data become “virtual operators”, or MVNOs. They take advantage of wholesale prices from carriers, while the big four sit back and make money without the work. These MVNOs in turn, typically offer plans that are valuable to a specific consumer segment that major carriers can’t or don’t know how to reach.

Virgin Mobile, Straight Talk and Boost Mobile are all MVNOs within the US. Yep, all of those carriers lease their capacity from (at least) one of the major carriers’ networks.

Coverage Map

The increased interest in MVNOs within the tech community signals that changes are coming to the mobile carrier market. Google announced its own MVNO, Project Fi, a wifi/data-driven carrier. While Apple introduced multi-carrier SIM cards for iPads last year, an indication that even if the Cupertino tech giant doesn’t pursue a MVNO, it plans to stay carrier-agnostic.

While MVNOs may appear to be low-end knockoffs of their high-end carrier partners, it is clear that some very reputable companies are looking to change consumers perceptions. With Project Fi, Google hopes to open consumer’s eyes to a new version of the typical mobile carrier while doing away with locked contracts.

The future of the mobile carrier is changing. Americans are accustomed to hating their provider.
Many MVNOs strive to change the way we think about our mobile service for the better. Will you consider an MVNO over a major carrier?

(Coverage Map Infographic by Rootmetrics)