Mobile Virtual Network Operator (MVNO) is a wireless communications service provider that does not possess network infrastructure of its own. MVNO offers wireless communication by agreements with the existing mobile network operators. These companies obtain bulk access to the mobile communication network at wholesale rate and set retail prices for their consumers. MVNO may have billing systems, customer service centers, sales and marketing personnel of their own. The MVNO companies provide subscriber identity module (SIM) card under their brand name.
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Mobile Virtual Network Operator (MVNO) companies do not necessarily have licensed frequency spectrum and network infrastructure. These companies provide service to their subscribers through the infrastructure of their partner mobile network operator (MNO). MNO companies that do not possess frequency spectrum in certain countries operate as MVNO in those regions. Although MVNO may pose a threat to the existing MNOs in terms of revenue, certain strategies such as network utilization motivate them to allow MVNO on their networks. This helps MNOs for optimum usage of their network infrastructure which in turn helps in minimum wastage of spectrum and is beneficial to the MNO in terms of revenue.
The key driving factor for mobile virtual network operator market is the rising number of mobile network subscribers across the world. Rise in demand for efficient cellular network makes it essential for telecommunication regulatory authorities to fragment the mobile network. It is achieved by encouraging the MNVO companies to enter the market in order to increase the number of players in telecommunication market. This helps consumers to select operator from a range of available companies. Regulatory authorities sought to introduce MVNO models in telecommunication market so as to increase the competition and reduce the entry barriers in the market. Moreover, MVNO creates competition amongst the existing players in mobile communication networks. This results in cost reduction of the telecommunication services which in turn benefits the consumers. Growing penetration of mobile communication in emerging markets such as Latin America, Africa, China, India and others is another factor boosting the growth of MVNO market. However, reduced tariffs and low profit margins for MVNO companies may hamper the growth of mobile virtual network operators market.
The mobile virtual network operator market is segmented based on type of service and geographic regions. In terms of service types, MVNO market is segmented as business, discount, ethnic, lifestyle and advertising funded MVNOs. Business MVNOs refer to bespoke/customized service provided to business organizations. Discount MVNOs include mobile communication service with reduced call rates. Ethnic MVNOs target some of the ethnic communities and offer low calling rates for communication to their home country. Lifestyle MVNOs focus on niche market demographics so as to offer customized service. Advertising funded MVNOs provide discounted call rates or free amount of call minutes, text messages and other facilities for advertising purpose.
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