Virtual Networks - Hidden Gems?

You may have heard the term 'MVNO' bandied about a lot, but what does it actually mean? MVNO stands for ‘Mobile Virtual Network Operator’, and these networks are often referred to as 'Virtual Networks'.

Virtual Networks are essentially a mobile service provider that runs on another network’s infrastructure. Network infrastructure is provided by MNO’s (Mobile Network Operators). There are three MNO’s in Ireland at present – Vodafone, Three and Eircom. 

Virtual Networks set their own prices and establish their own brand, while leasing the network infrastructure of an MNO to provide service to its customers. These smaller networks essentially piggyback on the larger networks' systems.

Often Virtual Networks target niche customer segments, such as those focused on value, or international usage. They can offer great value for the right user, with cheaper offerings and the same network quality as their host networks.

What infrastructure do the Virtual Networks use?

There are currently 7 Virtual Networks operating in Ireland. The majority of Irish Virtual Networks operate on the Three network. This includes the recently launched iD Mobile and Virgin Media, along with other operators that were using O2 Ireland’s infrastructure before its merger with Three. See the table below for a breakdown:

MVNO Network Market share*
Tesco Mobile Three 6.4%
Lycamobile Three 2.4%
Postmobile Vodafone ~1%
iD Mobile Three ~1%
Virgin Media Three ~1%
Blueface Three ~1%
48 Three ~1%

*Source: Q2 2015 Comreg Quarterly Key Data Report

This summer saw the launch of both iD Mobile and Virgin Media as new Virtual Networks. This came about as part of the merger between O2 Ireland and Hutchinson 3G (Three). The terms of the deal meant Three was ordered by the European Commission to sell 30% of its network capacity to Virtual Networks.

What's the advantage of being on a Virtual Network?

1. Value

Some Virtual Networks can offer significant savings for consumers. Virtual Networks don't tend to have large budgets for marketing spends, and so instead focus on keeping pricing down or on servicing niche markets. For example:

  • Post Mobile focus on prepay users and customers seeking value with some good deals to be had.   
  • Tesco Mobile can be great if you shop at Tesco supermarkets, with the company offering double clubcard points for every euro that you top up.
  • Blueface focus on the business segment of the market, with competitive offerings in this area.

These Virtual Networks could be considered 'hidden gems' in that they don't push their brand as loudly as the big boys, but dig into their pricing and you could find some great deals.

2. International Callers

Lycamobile and Tesco Mobile both offer really good rates for international calls. If you're one to make a lot of international calls and/or texts from Ireland to abroad, these networks can offer great value and are well worth considering.

3. Same Network Quality

As Virtual Networks use the same network infrastructure as the larger networks, the network quality and coverage will be the same. One possible exception is the support of 4G data speeds as currently iD Mobile are the only Virtual Network to offer 4G data. However, for 3G data, calls and texts, the coverage of Virtual Networks and MNOs are the same. 

What's the biggest Virtual Network in Ireland?

At the moment Tesco Mobile possesses the greatest market share, with 6.4% of the Irish market. Lycamobile follows this with a figure of 2.4%.

Other Virtual Networks account for only 0.3% of Irish Mobile subscriptions. The Irish Communications Regulator (ComReg) reports that there are 5,783,781 mobile subscriptions in Ireland as of June 2015, this means that only about 173,500 Irish customers are on these other Virtual Networks. However, we expect this figure to grow as new market entrants bring more competitive products to market.

Will MVNO's become more popular?

Looking at ComReg reports, market share amongst most Virtual Networks has remained steady at 0.3% for the past two years, however, Tesco Mobile has recorded strong growth. Between Q2 2014 and Q2 2015 alone the market share of Tesco Mobile has increased by 1.5% from 4.9% to 6.4%! Meaning Tesco have approximately 370,000 subscribers in Ireland at present, a pretty impressive figure.

We predict that the popularity and market share of Virtual Networks will significantly increase in the coming years. With the launch of two of these networks in 2015 alone, the competition amongst Virtual Networks and MNOs is set to intensify. This spells good news for consumers as it should lead to a reduction in mobile costs if networks opt to compete on price.


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