1. 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

2. Image courtesy of Paola Buelvas (papolareina@yahoo.es)
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

3. 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

4. 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.
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