mobile virtual network operator (MVNO) definition

This definition is part of our Essential Guide: Guide to mobile 2015: What is new?
Contributor(s): Cameron McKenzie

A mobile virtual network operator (MVNO) is a reseller for wireless communications services.

An MVNO leases wireless capacity (in effect, purchases “minutes”) from a third-party mobile network operator (MNO) at wholesale prices and resells it to consumers at reduced retail prices under its own business brand. MNOs such as Verizon Wireless and T-Mobile choose to sell to MVNOs because the networks have extra capacity that would otherwise be unused. Rather than taking a loss, the MNO makes a small profit by offloading capacity in bulk at wholesale prices.

MVNOs can afford to mark down their retail prices to a certain extent because they do not have to pay radio frequency spectrum licenses and they have no infrastructure to build or maintain. Because MVNOs have low overhead, they can spend aggressively on marketing to increase their chances of selling minutes to consumers. 

MVNOs typically offer prepaid wireless plans on a subscription basis. Sales and customer service may be handled directly by the MVNO or by yet another entity called a mobile virtual network enabler (MVNE). MVNEs specialize in marketing and administering mobile services.

 

This was first published in April 2014

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