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- The US Mobile Network
- Roaming Agreements
- Local Networks
- Mobile Virtual Network Operators
- Not So Virtual Operators
As with almost anything these days, buying online can offer more deals and better prices than in a mall store. Cellphone network contracts are exactly the same. Lots of smaller providers (cell network sub-providers) are online-only stores, and are cheaper than the bigger networks time and again.
There is considered to be a top 4 of US cellphone networks. These are Verizon, AT&T, T-Mobile and Sprint. US Cellular is sometimes on the list as well. Yet it has just 1/10th the connection numbers of the 4th biggest, Sprint.
The fact is that, even though there are hundreds – maybe thousands – of online airtime sellers, almost all use airtime bought from the big 4. So how does it all work and how can 3rd party sellers be cheaper than the main networks?
The US Mobile Network
Although all the major providers run their own networks, most of the equipment they use belongs to someone else. All networks used to build their own cell towers, at a high price. When it became clear this practice wasn’t working out, other ways of growing the networks was researched. Slowly, the large network providers started to share cell towers, as a result lowering costs by a lot.
To help raise competition and break the monopoly in place in many regions, the US government encouraged the practice. Most masts have since been sold off to private companies separate to the networks. These businesses then lease the tower and associated equipment back to the networks. Now 3 or 4 providers share a tower without any risk of corporate blocking. They share the hardware costs and, if the tower is on private land, the landowner often gets an increase rent based on the number of networks using the tower.
All in all there’s no downside to this arrangement. It helps improve coverage for all users. That is, unless a fault occurs which takes the tower out of service completely.
Where shared towers aren’t in use, or for times where a user of a local network travels to a different area, roaming often comes into effect. Roaming is where subscribers to one network can use the services of another when out of signal reach. Most often this occurs when travelling in other countries, but sometimes happens in the continental US.
When travelling overseas, roaming charges can be very high. In the US, most networks have agreements that no charge will be made to users from other networks. With the rising number of shared towers, though, roaming is becoming less and less necessary.
Local Cell Network Sub-Providers
There are around 80 local cell network sub-providers operating in the US. Large carriers own and operate these networks independently. In most cases, signals are only available to users in a very certain area. Travelling outside this area means no cell signal is available. Some local carriers do have roaming agreements with the large carriers, but many do not.
Most networks are currently 3G only, with very few have 4G connectivity. While some networks have in excess of 100,000 subscribers, the majority have no more than a few thousand local users.
Mobile Virtual Network Operators
There are currently around 100 “virtual operators” in the US. These airtime providers don’t run their own infrastructure or network facilities. but, instead, they lease from those who do.
Cell network sub-providers like these are typically the companies you will see advertising online or in local areas. Few operate a bricks and mortar store, although one or two larger ones have opened a physical store in recent years. Almost all will use one of the big 4 networks when selling airtime to subscribers. They lease airtime in wholesale blocks, and then sell it in smaller chunks to end users. This model is the same used by local utility companies. There, one company owns the main infrastructure, but householders can buy their water and electricity from anywhere.
Because the virtual operators buy at wholesale prices, and have much lower overhead costs, they can often undercut their parent provider. All support and administration is ran by the selling operator, who have access to the required resources from the main network.
Everybody wins from this arrangement. The main network can sell more airtime, even though at a reduced rate, and the seller gets to take a small profit from their subscribers.
Not So Virtual Operators
Because of the success of the 3rd party sellers, 3 of the 4 major carriers also run their own virtual selling business. One of the largest virtual cell network sub-providers, is Cricket Mobile. This virtual provider is owned by AT&T. Like, Sprint owns Boost and Virgin Mobile, and T-Mobile has MetroPCS. Verizon is the only major network who doesn’t have their own virtual network business.
By far the biggest virtual network operator is TracFone Wireless. They are a branch of América Móvil and run many virtual networks under a range of brand names. By 2015, TracFone Wireless had about 26 million subscribers and use all the major US networks as parent carriers.
The Virtual Network business is already a big player in the US cellphone industry, and growing. All together it is the 5th biggest network provider. With customers more set on than ever to get more for their money, the growth of the industry is unlikely to slow down any time soon.