MVNOs attract price-conscious customers from ‘big four’

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Mobile Virtual Network Operators (MVNOs) are more successful at attracting price-conscious customers when they want to switch provider, new YouGov research has revealed.

MVNOs, such as, use one of the ‘big four’ Mobile Network Operators’ infrastructure (EE, O2, Three and Vodafone) to power their services.

Some, such as Sky and Virgin Media, operate MVNOs to complement their other communications services but others, such as Giffgaff and Tesco Mobile, offer aggressively priced handset and SIM-Only deals to win market share.

MVNO popularity

For mobile users seeking to reduce their monthly outgoings, this is an extremely attractive proposition. Last year, six per cent of UK changed network. However, while MNOS had to absorb a net loss of 21 per cent, MVNOs experienced a net gain of 23 per cent.

Those who switched operator saved an average of £1.88 a month last year however there is a significant difference when that figure is broken down.

Customers who switched from one MNO to another MNO paid an average of £22.33 a month – an increase of £2.14. This contrasts with the £13.48 spent by someone who moved from an MNO to an MVNO – a decrease of nearly £5.

However, there is a large proportion of consumers willing to pay more for their contracts – so long as they get the latest features and handsets. One of the trade-offs with an MVNO is that many don’t offer the most advanced services, additional features, or premium devices.

Indeed, 51 per cent of those who switched to an MVNO kept their handset while the same percentage who moved to an MNO got a new phone. This is especially true of iPhone owners who seek to spread the cost over a number of years.

“The continued rise of MVNOs comes from consumers feeling comfortable about switching phone networks in a way that they don’t when it comes to moving bank,” said Russell Fedlman, Director of Digital, Media and Technology and YouGov.” However, while the growth of MVNOs has clearly been welcomed by the public, it poses several challenges to both MNOs and also the wider industry (handset manufacturers, retailers etc). Only time will tell how the market adapts and responds to this change.”

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