What's An MVNO?
What does MVNO mean? It stands for "Mobile Virtual Network
Operator." And why is this a topic of interest?
is very much a misunderstood term, but key to having a good
understanding of the wireless industry.
MVNOs are essentially wireless companies that don't own their own
network. Building a wireless network (i.e. towers, switches,
etc.) is EXTREMELY expensive. It takes armies of network
engineers and IT resources, not to mention a bundle of cash (!) to buy
spectrum and to build and maintain wireless networks. So, a
small wireless companies buy wireless minutes at a wholesale price from
larger carriers (ex. AT&T, Verizon, Sprint, T-Mobile, etc.).
In other words, these smaller companies pay for each minute
(or KB/MB of data)
customers use at a discounted rate. This allows them to focus
their resources on building their brand and basic business operations,
spending time raising capital and spending years building their own
MVNOs, however, have a very difficult time competing with the large
carriers that own their own network. This is because although
they buy minutes at a wholesale price, the cost is still quite
expensive compared to the carrier that owns the network. The
interesting thing, that you may have already uncovered, is that large
wireless carriers are actually selling minutes to MVNOs that are
essentially their competition! They do typically try to sell
minutes only to companies that aren't competing in the same space or
targeting the same demographic. That said, at some level, all
wireless companies are competing in the same marketplace.
Some good examples are:
- Jump Mobile
- Helio (purchased by Virgin)
- Mobile ESPN
- Page Plus
- Ready Mobile/Trumpet Mobile
- Simple Mobile
- Disney Mobile (bankrupt)
- Amp'd Mobile (bankrupt)
- Virgin Mobile USA (discontinued being an MVNO upon its
purchased by Sprint)
These companies own and operate every other part of their business,
such as Marketing, Finance, HR, Product Development, Customer Care,
etc. This gives them full control over their end-to-end
They simply don't have to worry about maintaining the
wireless towers, managing voice and data capacity, etc.
You'll also note that two of those listed above are no longer in
business. Amongst a number of factors, one key element of
failure has to do with the fact that it's very expensive to operate as
a Mobile Virtual Network
Operator. The tradeoff of all
control is the high cost that they pay per minute to the large wireless
carriers. It's also interesting to note that although Virgin
Mobile USA is still in operation, they have not made even a dollar of
profit since launching! Since their
(Initial Public Offering) in 2007, and Virgin Mobile USA's books were
available to the public, this fact became visible to the public, as
well as to angry investors. Their inability to operate
was a major contributing factor to Sprint's purchase of their U.S.
You may have noticed that Boost Mobile is not in the list above.
Of course, the list is not even close to being a
however, no matter how many would be included, Boost Mobile would not
be part of the list. Why not? Well, Boost is
an Mobile Virtual Network Operator, and if someone says they are, that
will be your first sign that they don't know what they're talking about.
Seriously though, Boost is not an MVNO because they are a fully own
subsidiary of Sprint Nextel Corporation. Boost is simply
division, or brand, within the company. Sprint Nextel has
ownership over the profits (or losses) of the Boost business.
Also, Boost shares the same IT, engineering, HR, and other
departments with the parent company. In addition, Boost does
pay a per minute wholesale cost. This gives Boost a much
advantage MVNOs because its cost structure is so much lower.
It's certainly not uncommon for people to lump Boost into
category, however, those that do either don't understand what an MVNO
is, or they are not fully aware of the structure of the Boost business.
Please don't get me wrong, this is a very confusing and often
misunderstood topic, so it's very easy to gloss over some of the
details, and many may not be interested in calling out the unique
elements of companies like Boost. It should also be noted
that now that Sprint owns Virgin, Virgin is no longer an MVNO.
This topic is extremely interesting, so if there's any further detail
you're interested in knowing, please don't hesitate to Contact