Virgin Media’s deal with Vodafone highlights the opportunity 5G presents for MVNO deals

UK communications company Virgin Media inked a five-year deal with Vodafone to transition its mobile virtual network operator (MVNO) service, called Virgin Mobile, onto Vodafone’s wireless network, per a company release.

Global Mobile Network Peak Usage Timeline

Business Insider Intelligence

Currently, Virgin Mobile uses BT Enterprise’s network for its mobile service, but that deal will end in 2021, at which point the MVNO’s 3 million customers will transition to Vodafone’s network. As part of the new partnership, Virgin Media additionally plans to launch a 5G service with Vodafone before 2021. 

As an MVNO, Virgin Mobile relies on another telecom’s network infrastructure to provide connectivity by leasing bandwidth. MVNO deals allow telecoms to derive additional revenue from their networks by leasing out unused network capacity. And for MVNOs, the deals allow them to offer competitive, lower-cost data and voice rates than their traditional telecom counterparts because they avoid the costs of maintaining their own network infrastructure.

This low-cost approach ultimately lets MVNOs sell mobile services to customers priced out of other telecom’s offerings or who simply wish to pay less for services. The major drawback of this strategy is that MVNOs are reliant on partners — who are also competitors — for service provision and continuity.

The commercialization of 5G gives telecoms an opportunity to win over new MVNO deals as they reconsider their options in light of the next-generation networks. MVNOs are continuously on the lookout for the best deal that allows them to offer the widest reaching network for the lowest price. For instance, MVNO Ting Mobile decided to switch its US service from T-Mobile to Verizon after T-Mobile faced delays in its merger with Sprint, failing to offer the promised benefits of a combined network.

As telecoms begin to offer 5G services, it presents a natural stopping point for MVNOs to reassess carrier offerings. Telecoms that aim to attract or retain MVNOs should look to establish widely available 5G services to differentiate their networks from rivals. For instance, Virgin Media likely took into account Vodafone’s wide international 5G presence that allows for 5G roaming, in addition to a likely lower price when switching from BT Enterprise.

Powered by WPeMatico

Antiques

AdSense