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 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. There are a number of 3G-only plans with larger data quotas that sell on the basis that you get good data value, but slower access speeds.

You may also get a smaller overall coverage footprint. This is most noticeable for any MVNO working on Telstra's network. Telstra network MVNOs use "parts" of Telstra's 3G and 4G network, with a slightly reduced coverage map and an absolute ceiling on access speeds.

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

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