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Large cellular networks will often enter into contracts with smaller companies to sublease licensed frequencies for reselling cellular service to a niche market. The smaller company is known as a MVNO (Mobile Virtual Network Operator).
There are many benefits a MVNO can provide to a much larger cellular service. The MVNO can customize its product to cater to a very distinct segment of the market. For example, Boost Mobile is a MVNO using the Sprint PCS network. Boost targets a young, hip, gadget-savvy demographic while Sprint PCS must cater to a wider demographic. Though Sprint PCS can't afford to cater to very specific target markets, it can benefit indirectly from these markets by leasing its network to others that can.
A network might also be underutilized in certain areas, especially as technology grows to meet faster data transfer demand. A MVNO might zero in on the area of new growth, helping to populate the network with that market segment that enjoys running ahead of the pack, thus generating profits that ultimately help fund growth.
A MVNO also provides more choices for the consumer with discounted or alternate service plans. Many pay as you go cell phone plans are offered by MVNOs. Virgin Mobile, which also uses the Sprint PCS network, caters to those too young to own a credit card, and to those whose usage is too low to justify a standard plan. Net 10 and Tracfone use the Cingular Wireless network to provide hybrid cell phone plans. These plans fall somewhere between pay as you go plans and monthly rate plans.
A MVNO maintains its own pricing structure, billing, and customer service. As far as customers are concerned, its operations are self-contained and all contractual agreements are between the customer and the MVNO.
Most local carriers are MVNOs, offering discounted rates for service areas that fall within a few counties or regional territories. However, a MVNO can also be nationwide -- though it might be limited to non-roaming territory. Therefore, the MVNO coverage map can be somewhat sparse compared to that of its larger partner. Be sure the MVNO serves the regions you require by consulting its coverage maps, rather than those of its partner.
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