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What is an alternative mobile carrier?

Alternative carriers abound around the world, and are becoming an increasingly reliable source of low-cost connectivity in the U.S. Also known as an MVNO, or Mobile Virtual Network Operator, these alternative operators are often no-frills, and cost less than the incumbent networks on which they operate.

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What is an alternative mobile operator?

The idea behind an MVNO is simple: instead of spending the billions of dollars building an entirely new nationwide network, companies enter into deals with the incumbent providers in a particular country — in the U.S., that's T-Mobile, AT&T, Verizon, and Sprint — to resell access to their networks. These often come in the form of contracts, where the smaller companies will buy space on the network — voice, messaging and, of course, data — at a heavily discounted, bulk rate, and sell it to you, the customer, for a profit.

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This benefits everyone in the equation: the incumbent gets a bunch of money upfront to invest back into its business, or give to shareholders in the form of dividends; the alternate provider gets to sell access to the network at a lower cost to the incumbent while still making a profit; and you, the user, gets to purchase access to a high-quality, fast and reliable network at prices lower than those incumbents.

Such a market only works when there is robust competition in the wireless market, which increasingly exists in the U.S. and is extremely common across Europe, where the market was built with alternative providers in mind.

So what's the big deal?

Alternative providers don't often have the financial resources to build their own networks, which is why they purchase wholesale acces to the companies that do, like the ones mentioned above. But because these smaller companies don't have the overhead of maintaining a network — the virtual in the term MVNO — they have more flexibility to provide service at lower costs. For people looking just to connect to a network without all the frills and fringe benefits that come with a contract, these are great options.

Because these smaller companies don't have the overhead of maintaining a network, they have more flexibility to provide service at lower costs.

The other thing is that MVNOs are usually aimed at single account holders — most eschew the share or family plan model of the larger incumbents — or specific demographics that may not be hit directly by the Big Four. In other words, alternative carriers are exactly that: meant to capture the customers remaining in the margins, or those looking to pay bottom dollar to avoid the often-superflous frills — T-Mobile Tuesdays (opens in new tab) come to mind — that are, many times, built into the cost of the plans of the incumbents.

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Some alternative carriers, such as Cricket Wireless (opens in new tab) and Boost Mobile (opens in new tab), are owned by the Big Four themselves — AT&T and Sprint, respectively — which allows the major incumbents to get ahead of any customers who want to leave by offering them a simplified, often discounted alternative that keeps them in the network.

More than one network

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But many alternative carriers don't just use one network. Ting (opens in new tab), for instance, uses both T-Mobile and Sprint, deciding between the two dynamically depending on the coverage. And Google's Project Fi has a deal with Three in the UK, in addition to carriers in the U.S., to access local networks without roaming.

Instead of spending the billions of dollars building an entirely new nationwide network, companies enter into deals with the incumbent providers in a particular country.

That's another advantage of these virtual operators: they can negotiate great deals with a number of carriers, and thanks to the beauty of the SIM card, give customers the best option wherever they are.

Fewer phones

Finally, one thing to keep in mind about alternative networks is that the companies often don't offer the latest and greatest smartphones. In fact, they often don't sell phones at all. That's because they don't want the hassle, and the overhead, of having to stock expensive devices they may not use. That's where unlocked phones come in.

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If you're savvy enough to buy a phone that you know will connect to the network of a particular carrier, you can save big money over the same two-year period a phone is usually paid off when on a big carrier.

Your turn

Are you subscribed to an alternative carrier? If so, which one, and why? We're really curious, so let us know in the comments!

Daniel Bader is a Senior Editor at iMore, offering his Canadian analysis on Apple and its awesome products. In addition to writing and producing, Daniel regularly appears on Canadian networks CBC and CTV as a technology analyst.

4 Comments
  • I think Cricket is the best bang for your buck. Yes they cap you at 8mb/s speeds, but for 99.9% of the population that's meaningless. They're also adding VoLTE/WiFi calling this year, and supposedly changing something on their back-end to lower ping times. Personally I'm still on Verizon b/c their plan options are cheaper than AT&T and I also get a corporate discount. But Cricket would be my next choice.
  • I was with Cricket until I found Mint, now I just pay once a year for my service and the only niggle is that when you switch Phones etc is that you have to manually enter the settings for MMS and data into the phone but how often do you switch phones? Not often. The only feature that I have ever missed is the WiFi calling that T-Mobile had introduced just before I moved to Cricket. Mint has it for Android but currently not for iOS, I'm sure that they will eventually have it. I don't have high mobile data usage most of mine is through WiFi so I the 2GB plan paid up front for the year gives me a service that is perfectly fine for my needs with mobile hotspot for the odd occasion that I may need it for less than $20 a month. Why pay more than you really need to.
  • I disagree that there are ANY downsides to an MVNO (the only one I have ever found is slower data, but 5Mbps is plenty for me). Sure, some are pretty lame, but in my experience, you're crazy NOT to use them. The big problem is, the big guys (eg: Tracfone, Cricket, etc), are expensive enough they don't always offer much advantage over a traditional carrier. In fact, many of the MVNO's you've heard of are probably just owned by Tracfone (who is a huge player). I recently started using Boom Mobile (boom.us). They offer service on several networks, but I us the service on Verizon's network (I live in a very remote location, and they are the only carrier that has reliable service, regardless of what AT&T's coverage map says). With Boom I get flat honest pricing. None of that extra fee BS on the big guys. Tax is even included in the price. I get Unlimited Text and Calling, 2GB of LTE, then unlimited 2G after that. I have Verizon coverage, WITH roaming, Visual Voicemail, and tethering. They automatically charge my credit card. I literally set it and forget it. The only difference is my checking balance at the end of the month. I can't even imagine what that would all cost me if I paid Verizon directly. Their service is US based, and have been phenomenal the few times I've needed them (mostly porting and setting up VV and tethering. MVNO's are like the big guys, some are great, some are meh. The big difference is, the ones who spend a lot on advertising, don't seem to offer much in savings.
  • I have Ting service, so I only pay for what I use (usually 2GB, 100 min., 100 texts). My monthly bill is $34.