Mobile Virtual Network Operator

A mobile virtual network operator (MVNO), or mobile other licensed operator (MOLO), is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. An MVNO may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler (MVNE).

MVNO agreements with network operators date back to the 1990s, when the European telecom market saw market liberalization, new regulatory frameworks, better 2G network technology, and a subsequent jump in wireless subscriber numbers. Though the new 2G networks more efficiently managed the limited frequency bands allocated to wireless service, new mobile entrants were still limited by their ability to access frequency bands in a restricted spectrum.

With European markets newly open to competition and new technology enabling better service and cheaper handsets, there was a massive surge in demand for cellular phones. In the midst of this swell, Sense Communications fought for access to mobile network operator (MNO) spectrum in Scandinavia in 1997. Sense was able to establish an MVNO agreement with Sonera in Finland, but it failed to persuade mobile network operators (MNO) in Sweden, Denmark, and Norway. Sense appealed to EU regulators, citing provisions that required certain mobile network operators (MNO) to allow new entrants interconnection; however, Sense's claim was denied.

Despite Sense's failure, the regulator in Denmark saw the promise in the MVNO model as a cost-effective route for telecom companies to enter the market and in May 2000, legislation passed that required network operators with Significant Market Power (SMP), to open up access to their infrastructure. By August of that same year, the mobile network operator (MNO) SONOFON had solidified the first viable MNVO agreement with Tele2. This agreement provided Tele2 with access to SONOFON's network for both mobile and roaming services, the latter of which had been requested by Sense Communications (and denied). With the new regulations in place, MVNOs in Scandinavia eventually grew to a market share of above 10%.

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Wikipedia