What's An MVNO And Why Should You Care?

When you're choosing a mobile phone network, you'll quickly face the choice between a "regular" telephone network and a mobile virtual network operator (MVNO). What's the difference and does it matter?

Building a mobile phone network is an expensive business. You have to purchase the rights to mobile spectrum from the government, for a start, and then construct a connected network of mobile towers, which is especially expensive in a large, sparsely populated country like Australia. So it's unsurprising that only a handful of companies ever get together the funds to build and maintain a mobile network.

In Australia, there are essentially three full-scale network operators: Telstra, Optus and Vodafone/3. While each of those operators actually operates more than one network of its own (reflecting the different spectrum it owns and the different frequencies it operates on), for practical purposes they can be considered the three key players.

Those operators can make money out of their networks in two ways. They can sell services directly to consumers under their own brands, which remains the dominant model in Australia. Or they can sell wholesale access to their networks to other companies, which then sell their own bundle of services. In the mobile space, this is often referred to as being a mobile virtual network operator, or MVNO. (The same model applies to Internet service providers (ISPs) in Australia, many of whom buy wholesale ADSL access and then sell it to individual customers.)

In Australia, the vast majority of MVNO operators use the Optus network. That's not to say Optus has a monopoly on the space: Crazy John's, for instance, is a Vodafone MVNO, and recently launched MVNO Amaysim told Lifehacker it had talked to all three operators before settling on Optus. However, if you're buying a mobile plan from a provider other than "the big three", chances are you'll be using Optus.

The big potential advantage of using an MVNO is that you often get access to pricing models which the mainstream providers don't feature. Amaysim, for example, doesn't charge a flag fall on calls. That doesn't necessarily make it cheaper — that will depend on your calling patterns — but it offers a different mechanism which may suit your needs. You might also be able to simplify your billing arrangements using an MVNO. For instance, iiNet recently launched a mobile phone service designed exclusively for its existing Internet customers. Conversely, the biggest potential disadvantage of the MVNO is that they don't control their actual network, so if you have service or reception problems it can be fiddlier to get them resolved.

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Comments

    Crazy John's is owned by Vodafone so while the MVNO status is accurate, it doesn't really count as a ringing endorsement of competition. Is there any independent MVNO using a network other than Optus ? Or do the other networks intentional make themselves unattractive to third party operators ?

    Be mindful of the fact that not all MVNO's (and VISP's, for that matter) are simply reselling another carrier's network. For example, Lebara Mobile do their own call switching onto their voice network; most Telstra Wholesale customers don't buy transit from Telstra (but they all get their AGVC - no choice there).

    Also, some MVNO's are small shops and/or suck at the whole customer service thing - others could show the rest a thing or two about customer service and being Awesome™.

    What about virgin?

    Gary: Transact (based in ACT) uses Vodafone.
    Jimmy: Virgin uses the Optus network.

      My understanding is that virgin is a wholy owned subsidiary of Optus. That said I prefer virgin to Optus itself and also crazy john, for a number of reasons...

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