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Over the past few months, you may have heard the term MVNO tossed around a lot, and you may be wondering what an MVNO actually is. The short answer to that question is Google’s Project Fi. Project Fi is an MVNO. It’s not the only one, but it is an MVNO service. That doesn’t really answer the question at a detailed level though. An MVNO, or mobile virtual network operator, is a smaller company who essentially leases network spectrum from a larger carrier to sell service to customers. There are more than a few of them throughout the U.S. and you might have never noticed. Boost Mobile is an MVNO, so is Metro PCS, Virgin Mobile, and so on. Each major carrier has some MVNO’s or at least one MVNO that they lease the unused parts of their spectrum to, and now Sprint and T-Mobile have both gained one more with Google’s newly announced Project Fi.
A mobile virtual network operator generally gets spectrum at wholesale prices which is in part how they’re able to offer rates to customers at a lower cost compared to other, bigger networks like T-Mobile, Sprint, Verizon and AT&T. They tend to service people that are looking for plans at a much lower cost and they offer contract-free service with no commitment and generally no requirement of a credit check. Mobile virtual network operators aren’t the same in all countries though, as some countries introduced the MVNO as a way to foster competition with the goal of benefiting the customer. Other reasons for the MVNO of course were that they offered companies a way to gain revenue from the unused spectrum. Think of an MVNO kind of like a franchise. Franchisers charge a fee to anyone looking to run a business with the brand name recognition and products from the original company, and larger carriers lease out the unused spectrum to a company wishing to become an MVNO and offer that spectrum with their own rates and services. There are some differences of course between an MVNO and a franchise, quite a lot actually, but it’s a loose comparison that fits well enough to help explain what an MVNO is.
The question though is why would Google want to become an MVNO, as MVNO’s typically are in the business to make money, and it would appear that Google likely is not. As Project Fi is offering a low cost plan of $20 a month for unlimited talk and text, with the addition of pay per use data by the GB, it’s certainly different from what other carriers offer but not groundbreaking on a scale to scoop customers out from other carriers. There’s also the fact that they only offer the service with one device, the Nexus 6, which is expensive and will likely be unattractive to some customers because of the price. So, what’s the end game? What does Google get out of it? It’s tough to say since there is really no way to know, especially now since Project Fi was just announced. It’s likely though that Google isn’t in it for the money. What they are probably trying to achieve is something on a grander scale, like shift the tides of the industry in how people access their mobile data, what it costs and how the technology connects us all together. Parts of Project Fi are nothing new, other parts are pretty innovative, like refunding customers money for the amounts of unused data they’ve previously paid for.