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What is an MVNO and why would you use one?

Mobile Virtual Network Operators (MVNOs) provide an alternative to the "big three" network providers in Australia. Here's what you need to know.

So what is an MVNO?

MVNO stands for Mobile Virtual Network Operator. If you unpack those words individually, the concept of an MVNO becomes clear. They're mobile operators, the same as the big players like Telstra, Optus or Vodafone, but instead of operating full mobile networks with signalling towers, repeaters and everything else that makes up the hardware of a mobile network, they instead lease space on existing mobile networks from the big three telcos. Hence, they're "virtual" mobile network operators.

How can these providers sell more cheaply than Telstra, Optus and Vodafone?

The business model for an MVNO relies on lower overall operating costs, because what they're paying for is essentially a lease on the capacity of existing networks, but without the inherent overheads of those networks. So they don't have to pay for spectrum access rights, mobile tower maintenance or network development of newer technologies such as 700Mhz 4G LTE, for example.

They're also virtual in the sense that your primary point of contact with an MVNO will almost always be via phone or Internet only. While a brand such as Telstra, Optus or Vodafone has physical store presence, MVNO's don't spend their income that way.

There's also the general presumption built into the MVNO model that customers will buy packages in excess of their actual needs, giving a clear profit margin to the MVNO itself. That's not all that different from the way that full telcos operate in any case.

Finally, there's the question of technology access. Some MVNOs buy cheaper access to older technology networks in order to keep their operating costs low.

This is most noticeable for any MVNO working on Telstra's network, as to date it hasn't generally offered access to its 4G network, let alone its 700MHz "4GX" network to any MVNO (with the exception of Boost Mobile). Instead, Telstra network MVNOs use "parts" of Telstra's 3G network, with a slightly reduced coverage map and an absolute ceiling on access speeds. If you're used to the 4G speeds offered on the big three networks and you switch to a 3G-only MVNO this may be more noticeable, as it will affect services such as streaming media or any kind of data upload such as photo sharing.

Do they provide a reliable service?

In terms of network coverage, the service an MVNO offers shouldn't differ in any way at all from the service that you'd get from the underlying network provider at the same location. That makes sense, because it's the exact same network infrastructure. If there's an outage or a reception problem with an MVNO, it's a question of the underlying carrier's network, not the MVNO.

Your MVNO should provide a coverage map based on the carrier's own coverage maps to help guide your predicted experience on the network. These aren't always 100 percent accurate, but they're a decent baseline to work from.

In terms of customer service, however, it may be a different issue, as your points of contact are somewhat reduced. As always, it's well worth reading the critical information summary of your contract prior to signing up to avoid any nasty surprises such as higher than expected call costs or data charging systems.

Do they offer contract plans as well as month-to-month?

MVNOs tend to focus on prepaid and month-to-month deals, because for the most part they're aimed at a price-conscious budget market more focused on the dollar spend than any other extra features, but there are plenty of MVNOs that will offer postpaid plans in both month-to-month and 12- or 24- month flavours.

MVNOs in Australia

ProviderNetwork used
ALDIMobileTelstra 3G
AmaysimOptus 4G
Bendigo Bank TelcoOptus 4G
BoostTelstra 4G
CMobileTelstra 3G/Vodafone 3G
DodoOptus 4G
ExetelOptus 4G
GoTalkVodafone 3G
Hello MobileVodafone 3G
iiNetOptus 4G
JeeneeOptus 4G
KoganVodafone 3G
LebaraVodafone 3G
LiveConnectedOptus 4G
OVOOptus 4G
Southern PhoneTelstra 3G/Optus 3G
SpintelOptus 4G
TelechoiceOptus 4G
Think MobileOptus 4G
TPGOptus 4G
VayaOptus 4G
Virgin MobileOptus 4G
WoolworthsTelstra 3G
YomojoOptus 4G

Image: Shutterstock

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