Showing results for 
Search instead for 
Did you mean: 

10 Reasons I Don’t Like MVNOs (available in Spanish)


10 Reasons I Don’t Like MVNOs

The phenomena of MVNO (Mobile Virtual Network Operators) is getting to a new high, especially in LATAM were markets are reaching maturity and penetrations levels grow beyond 100%, countries like Brazil and Colombia are of major interest for this new actors in the region. Globally it all started back in 2006, back then many virtual operators failed to keep their subscriber base, but now, it seems like they are reemerging using lessons of the past. The biggest concentration of MVNO can be found in Europe, followed by Asia, North America and South America.

But Why…. Why?

Before I continue I must clarify, I don’t particularly have bad animosity towards the trend, but I like to give a different point of view from that usually developed by analysts and media, having said that, is clear that success in the industry for MVNO is based on the idea of competing on a service level and not on a network level, and that MVNOs offer the MNO (Mobile Network Operators) the opportunity to add customers with value at no additional costs, or in other words, they help the MNO to attract new users in an already saturated market, but what about technological innovation and real service improvement for users, are the MVNO really adding value in these areas?

The Trend is here to Stay

So a MVNO resells air time of a service from a MNO, and does it by developing new commercial strategies and innovative ways to attract users, this is something that despite of what anybody can say has been delivering successful results so far, so why fix something that is working, right? The industry even developed a whole ecosystem to support the model where MVNA (Mobile Virtual Network Aggregators) and MVNE (Mobile Virtual Network Enablers) become important actors, the first one group various MVNO to present a better deal for MNO the second one provide services to MVNO to ease the entrance and maintenance of the service, such ecosystem is gearing up and it seems to provide means for a long permanence on the industry.

10 Reasons I Don’t like MVNOs


Image courtesy of Paola Buelvas (

  1. A MVNO usually displays lower ARPU than MNO; due to the business model they are limited in this aspect, although the ARPU is a tricky indicator for an established MNO, for MVNO is a meaningful indicator showing restriction in the income and at the same time sending a message of less available margin to re-invest in service improvement and VAS (Value Aggregated Service) deployment.

  2. A MVNO cannot match the level of device subsidy of MNO; this seems like a minor issue, considering the fact of a multi-SIM culture especially in LATAM where people take advantage of MNO special discounts for On-Net calls. But to me is important especially looking the service a bit ahead, where data is the driver of the service instead of the voice and changing SIM is not that practical for a data service. On the other hand is the fact that wireless industry is becoming a device oriented industry, walled gardens and services tied to device manufacturers and OTT branded operative systems is the norm now, additionally the life cycle of a device is shorter every year and for me is important that my provider offers me a plan of device renewal with good subsidy and variety of brands.

  3. MVNO are not technological innovators; No surprise here, the easy road for MVNO is to think that since they do not own the network then it is no room or responsibility for technological innovation, most of MVNO fall into this category and the reality is that the industry is not beneficiating from these positions, there are some interesting proposals that I’ll address in 4, but they are far from being the norm.

  4. MVNO willing to try new technological paradigms fall short; M2M is a way of interconnecting devices and machines through the Internet, and since related applications usually consume low bandwidth and are intermittent by nature is an excellent option for MNO without big reserves of the spectrum resource, so MVNO are entering this niche of the market, but they seem to be doing it to stay as a niche provider without any ambition to take the technology further. Another example is the Wi-Fi offload offering of MVNO in USA that promise a patented hybrid call technology that allows to use cellular and Wi-Fi networks transparently, the catch is that service only works in one device; don’t get me wrong this is by far the most interesting proposal of a MVNO yet, but the home page of the MVNO doesn’t say anything about handover treatment for any voice call or data session. It seems only time will tell about the success of such proposal, but I feel that still fall short of expectations. 

  5. MVNO are not relevant in the OTT/MNO struggle; Industry faces an interesting shift in the balance of user engagement, MNO are being cornered by a complete set of substitute services from Over the Top players that use network infrastructure without leaving any benefit for traditional service providers. It seems like a big problem, and MVNOs are not adding any value for MNO regarding the OTT/MNO struggle; one might think that since some OTT are entering the MVNO business model this will translate in a variety agreements between the two to strengthen the service portfolio for wireless users, but the reality is that OTT/MNO agreements are just limited to the reselling of minutes. It just feels like another wasted opportunity.

  6. MVNO distract MNO from service improvement; MVNO offer the MNO the possibility to attract new users without the need to add value to service or service portfolio, so what seems like an improvement for the user in the long term it’s not, because the MVNO is providing the users with the same services MNO provides, innovation suffers because of this.

  7. MVNO fail to provide a competitive environment for the market; the first impression is that MVNO can provide entrance to new actors in a market dominated by few operators and thus helping to create a competitive environment, but is just an illusion, MVNO cannot compete with MNO, they’re just not built for that! MVNO prosper because MNO let them to, proof of this is the fact that many MVNO have disappeared because the MNO merge them or just because the MNO restructured its business, so no points for MVNO on this area either.

  8. When acquiring services from MNVO you have to deal with a reseller; this post entry is biased of course, but this point best represents my angle, especially because of my technical background. Whenever I can choose to buy goods from the manufacturer directly or from a distribution point I choose to buy from the manufacturer, is a matter of thrust and a personal habit, but I have an argumentation on the matter that I consider logical. When I buy something from someone that I know ahead is not directly and totally involved in the realization of the service I have always doubt the efficiency of the technical support, in the case of MNVO the technical support will be the same of the MNO, but the principal point of contact will be the customer service of the MNVO, so for me, the time for problem resolution becomes a big question mark. As I said, is the more personal reason of all ten.

  9. MVNO contribute to the old centralized bundled service model; almost 20% of MVNO globally come from Telecom companies that do not have a wireless license, this business model allows them to offer bundled services (TV, fixed telephony, fixed broadband, and wireless services), but as I explained in 5, OTT have propitiated a change in the industry; a disruption thrust is starting to predominate among users, people are less attracted to acquire all communications services from just one service provider, people use many devices in many situations and the old centralized offering seems a bit week to face the disruption trend.

  10. MVNO not always deliver as promised; finally, is hard to not pay attention to online forums and support chats crowded with people complaining about how their unlimited offering of calls, SMS or data access turned out to be limited after all, I mean what would you expect, the network is the same used for limited plans from MNO. Some time ago the idea of MVNO offering a free service supported by advertising during sessions or calls started to gain some attention, but to the best of my knowledge this model has never seen the light and the reason I think is due to the fact that some network infrastructure is needed to make this happen and as exposed before MVNO are not very into technological innovation and network infrastructure inversion.

My opinion is open to be discussed, supported or rejected; please let me know your comments.

Follow me, @jomaguo.

Read this blog post in Spanish