Newsletter 
The MVNO market continues to grow steadily in the US. Companies outside the telecommunications market, such as cable providers, have entered the segment through this format. Furthermore, their arrival has had a significant impact on the performance and prices of traditional carriers. A new study has even revealed that US cable MVNOs offer the lowest total cost of ownership for flagship devices from brands such as Apple, Samsung, and Google.
In the dynamic US telecommunications ecosystem, Mobile Virtual Network Operators (MVNOs) are radically transforming the way mobile services are delivered, especially those supported by traditional cable companies. These virtual operators have experienced significant growth, reaching 36 million active subscribers in 2019 and projecting market growth from the current $70 billion to $147 billion by 2032. Their business model, which leverages existing infrastructure while focusing on user experience, has a lot to do with this.
US cable MVNOs offer the lowest total cost of ownership for flagship phones in the US
According to the analytics and consulting firm GlobalData, US cable MVNOs already offer the lowest TCO (total cost of ownership) on flagship phones from some of the major brands. TCO is the total of the required service cost (mandatory plans) and the device’s monthly cost (what you pay for the phone alone). Basically, they offer the best value when it comes to acquiring devices. There are still factors to take into account, though. While MVNOs seem like the ideal option for everyone today, there are cases where MNOs (traditional carriers) might be a better fit for you.
According to the report, Spectrum Mobile, Optimum Mobile, and Xfinity Mobile offer the lowest TCO in the US telecommunications industry. But how do they achieve this?
What is an MVNO?
A Mobile Virtual Network Operator (MVNO) is a company that provides mobile telephony and data services without owning a network infrastructure. In the United States, these operators lease services from the country’s four major networks: AT&T Mobility, Boost Mobile, T-Mobile, and Verizon. This “virtual” nature is the fundamental difference from traditional operators, as MVNOs do not need to invest in expensive antennas, towers, or radio spectrum infrastructure.
The ability to operate without their infrastructure allows MVNOs to focus exclusively on the customer experience. This frees them from the operational complexity associated with maintaining physical networks. The MVNO business model gives companies significant flexibility to design attractive commercial offers. In fact, MVNO plans are often highly customizable based on your usage. Companies can even target specific market segments potentially underserved by traditional carriers.
How do they manage to offer lower prices?
MVNOs’ most obvious competitive advantage lies in their considerably leaner cost structure than traditional operators. As mentioned above, they don’t have to invest billions in network infrastructure. Thus, MVNOs eliminate the costs associated with building and maintaining cell towers, base stations, and acquiring radio spectrum.
These substantial infrastructure savings allow them to adopt more aggressive pricing strategies. In other words, end-user bills reflect a portion of these savings. Additionally, many MVNOs have optimized their operations by completely digitizing their customer service and sales processes. This minimizes the need for physical stores and in-person support staff for greater operational efficiency.
The emerging trend shows that various players are entering the MVNO market, from retailers to e-commerce giants, using cloud-based MVNE (Mobile Virtual Network Enabler) platforms to launch services in record time. These platforms facilitate entry into the telecommunications market for companies with no prior experience in the sector, allowing them to complement their core offerings with mobile services.
The role of cable companies as MVNOs
Traditional cable companies are in a privileged position to compete as MVNOs, thanks to their established customer base and existing network capabilities. By integrating mobile services with their television, broadband internet, and landline telephony offerings, they can create attractive convergent packages that increase customer loyalty and value.
Many of these companies can leverage their existing infrastructure and resource-sharing agreements. These are similar to the fiber network sharing agreements entered into by other companies. Such agreements allow them to optimize costs and maximize operational efficiencies.
Essentially, these US companies have been able to significantly diversify their product offerings. Furthermore, they already had an established user base to which they could offer service, without the cost of setting up expensive base stations or nationwide networks.
Competitive advantages of MVNOs
MVNOs’ main strength lies in their operational agility and capacity for innovation. Unconstrained by complex infrastructure management, they can focus entirely on improving the customer experience. They achieve this through highly customized commercial proposals. This flexibility allows them to quickly adapt to current consumer needs.
Another significant advantage is their ability to target specific market niches that may not be sufficiently profitable for traditional operators. Different MVNOs often focus on particular segments: businesses, low-income assistance programs (Lifeline), or personal consumers with specific needs.
“Postpaid wireless players are attaching high-spend plan requirements to most device promotions. But the cable MVNOs target home internet customers with offers of free or low-cost mobile service and pair it with device promotions that are often just as competitive as the big three carriers,” said Nicole Teasley, Senior Telecom Consumer Services Analyst at GlobalData.
“Cable MVNOs win the lowest total cost of ownership battle on plan costs alone and are poised to make big waves within their relatively massive broadband footprints.”
Accelerated digitalization and the implementation of software-based BSS (Business Support Systems) platforms allow MVNOs to launch services in record time, setting new standards for speed and adaptability in the sector. This agility will continue to be a key differentiating factor compared to traditional operators.
Limitations and challenges
Despite their numerous advantages, MVNOs face significant challenges. One major limitation is their dependence on third-party infrastructure, which can restrict their ability to fully control the quality of the service offered. As with fiber optics, where repairs require specialized tools and trained personnel, MVNOs depend on the ability and willingness of their host operators to resolve technical issues.
Another significant disadvantage is the limited range of compatible devices. Many MVNOs tend to offer a more restricted range of phones, often older models or devices already discontinued by the major networks. This isn’t that important if you typically purchase carrier-free phones on your own. However, some MVNOs offer a limited list of supported devices.
Additionally, MVNOs generally have less control over network resource allocation. This can translate into slower speeds or lower traffic priority during periods of congestion compared to the host operator.
Should you switch to MVNO?
The easy answer to this question might be “yes.” However, there are more factors to consider before making the decision. Basically, it all depends on each user’s particular needs.
MVNOs offer advantages such as competitive pricing, plan flexibility, and more personalized customer service. This can be ideal for those looking for savings and customized options. However, MNOs typically offer broader coverage and more stable service quality. This aspect is crucial for users who require constant, high-quality connectivity.
So, before choosing a carrier, you should consider parameters such as budget, the need for plan flexibility, and service quality. There is no “ultimate solution” for all needs and requirements.
Conclusion
Cable company MVNOs are redefining the competitive landscape of the US mobile telecommunications market. They offer more affordable alternatives and personalized services thanks to their flexible and efficient operating model. Their growing presence and significant expansion projections demonstrate the viability and attractiveness of this approach.
MVNOs’ benefits, like lower costs, more flexibility, and customizable services, usually outweigh their downsides, like relying on other companies’ infrastructure and device limits. The future of the sector points toward greater service convergence. That is, cable companies are leveraging their established position to create integrated offerings that combine fixed and mobile connectivity.
In short, MVNOs are democratizing access to mobile services. They intensify competition and stimulate innovation in the sector, benefiting both consumers and the digital economy as a whole.