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Study on Mobile Virtual Network Operations

Md. Whaiduzzaman and Mahmudur Rahman

Abstract— In this paper, Mobile Virtual Network operation has been introduced. A full MVNO consists of a Home Location
Register (HLR), Mobile Switching Centre (MSC), Authentication Centre (AUC), and Equipment Identity Register (EIR) and
associated signaling capabilities.We analyze the MVNO sector from two perspectives: the factors including the consumer,
industry, regulation and technology characteristics and successful MVNOs in various organization for Economic Cooperation
and Development markets.The trend of how the MVNO market has changed and what opportunities ,network operators and
potential MVNO are likely to face. Different sectors related to implementation of MVNO are working with the GSM technology
and the feasibility study of implementation of MVNO in the present world.

Index Terms—MVNO, MNO, Virtual Network, GSM

——————————  ——————————

1 INTRODUCTION
the concept.
 "Mobile" refers to the fact that such operators of-
ow a day all over the world mobile communication fer services in the mobile market.

N market has reached its saturation point. As the

market has matured, the basic subscription has be-
 "Virtual" means that such an operator does not
have its own spectrum allocation or license but
instead acquires them from already established
come a commodity product and the competition is based
increasingly on existing subscribers. Until recently, each Mobile Network Operators (host operator).
national market has consisted of only few operators. The MVNOs do not have a governmental license to
two main types of operators are: Mobile network opera- use radio spectrum, but have access to one (or, in
tors (MNOs) providing a mobile network for the purpos- theory, perhaps more) of the radio elements of a
es of transmitting, distributing, or providing messages mobile operator and are able to offer services to
and Mobile service operators (MSOs) transmitting mes- subscribers using such elements. At minimum,
sages over a mobile network obtained for use from a mo- these radio elements are: The radio transmission
bile network operator. link, its control functions and the mobility man-
SIM-based mobile services can be offered without own- agement functions that keep track of exactly
ing a radio network or rights to the required radio spec- where mobile handsets are located so that calls
trum. Simultaneously the launch of mobile number por- can be delivered to them; and Some transmission
tability has decreased switching costs and opened up the and switching facilities needed to link the radio
mobile communications market to new service providers. facilities to the points of interconnection, either
This paper studies about the mobile virtual network op- with the MVNO's system direct, or with transit
erators (MVNO), a new type of communication service network operators.
provider.  "Network" means that there is some element
provided by the MVNO itself rather than all ser-
1.1 WHAT IS AN MVNO vices being undertaken by the host operator.
 "Operator" means that the MVNO appears to the
MVNO stands for mobile virtual network operator. As
customer as an independent operator in its own
mentioned above the MVNO is a new emerging model in
right rather than an entity using somebody else's
telecommunication sector. Secondly, there is unanimous
network.
agreement about what an MVNO does not have but there
Hence putting all these together it appears that MVNO
is no consensus about what an MVNO must have. So
“is a mobile operator that does not own its own spectrum
there is a significant amount of disagreement over what
and usually does not have its own network infrastructure.
exactly constitutes an MVNO. However, taking each
Instead, MVNO's have business arrangements with tradi-
word in turn perhaps provides a clearer understanding of
tional mobile operators to buy minutes of use (MOU) for
sale to their own customers.”
————————————————

 Md. Whaiduzzaman is a Lecturer with the Institue of Information Tech-

nology, Jahangirnagar University, Dhaka
 M. Rahman is with the Department of Electronics & Telecommunication
Engineering, Daffodil International University, Dhaka.
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MVNO Model has following distinctive features:

1. It has its own mobile network code

1.2 MVNO CONCEPT & TYPES
2. Issue its own SIM cards
3. Operate its own mobile switching centre (MSC)
MVNO is an organization that offers mobile subscriptions 4. Operate its own home location register (HLR)
in its own brand name, controlling the billing relationship 5. Operate its own billing platform
with the customer, but who does not hold its own fre- 6. Independent pricing
quency license in the market. So MVNO, by nature, has to 7. Independent billing
utilize such facilities of the existing mobile network oper- 8. Independent Marketing
ator as base stations, switching system and radio frequen-
cy, etc. MVNO can be distinguished into 4 types by the Category II: Skinny/Service provider MVNO: Such
degree of dependence on MNO’s facilities. The first type, MVNOs rely almost totally on the mobile operator's facili-
type A, is the simplest pure reseller, as just reselling of the ties. Normally such MVNO just re-sells minutes43 ac-
existing MNO’s mobile service to customers with his own quired in bulk from the MNO and do not possess its own
brand or MNO’s brand, which is totally dependent on brand name. Calls to and from these MVNO subscribers
MNO’s telecommunications facilities. The second type is would be treated as if they were calls to the mobile net-
the simple MVNO that hold HLR (Home Location Regis- work operator's own customers. Similarly, the MVNO
ter) to manage the customer’s information and his own does not have its own codes/ numbers instead the num-
brand but uses MNO’s network code and SIM (Subscriber bers of MNOs are used. Further, the MVNO does not
Identification Module) card. So the type B can provide the have its own SIM rather uses the SIMs of MNO.
value-added service to his own customers although some
parts of voice mobile service depend on the MNO. The 2.1 NETWORKS & ARCHITECTURES
type C is an MVNO that added switching facilities to the
type B. So the type C includes the every feature of B type.
Lastly, D type in figure 1 is called full MVNO because the
type has almost mobile facilities including switching,
transmission without radio frequency and some base
transmission stations. Thus, the type D is the most inde-
pendent operator among 4 types, which can provide mo-
bile services including the several value-added services to
his own customers with independent marketing strategies
such as pricing, brand, SIM card, etc. In the 4 type cases of
real world, the wholesale compensation for using MNO’s
facilities has been usually calculated by cost base, or re-
tail-price base.

Figure 2.1: Illustration of a MVNO network

1.3 DIFFERENT CATEGORIES OF MVNOS
A mobile virtual network operator provides cellular ser-
vices without owning spectrum access rights. From the
Category I: Plump/Full MVNO: MVNO own its brand
customers' point of view, a MVNO looks like any other
name, numbering series, billing system, SIMs, some net-
cellular operator, but a MVNO does not own or operate
work infrastructure like IN, HLR and even MSC. The
base station infrastructure. The above figure illustrates
MVNO does not own spectrum and therefore, uses radio
the MVNO idea. There are different scenarios for a
network of MNO under business agreement for provision
MVNO approach and consequently different Architec-
of services to its customers. In this category, the MVNO
tures for the MVNO such as:
seems like a full fledged mobile operator and public can
not differentiate in the MNO and MVNO. This category
 A full MVNO, with its own SIM card, network
of MVNO operates under a license granted by the respec-
selection code and switching capabilities as well
tive regulator and is bound by the license conditions simi-
as service center but without spectrum.
lar to MNO.
 IA-MVNO (Indirect Access MVNO) or Enhanced
service provider without SIM card, but with own
This category of MVNO is usually operating in fully ma-
core network (circuit switched and/or packet)
ture markets where there is sufficient competition and the
and service facilities, e.g. own IN or IP applica-
growth is almost flat. The MNOs have sufficient spare
tion servers.
capacity to sell in bulk to MVNO and thus earn some rev-
 Wireless ISP without own core network; basically
enue, whereas the MVNO adds value to it and re-sell it in
an Internet portal providing wireless IP services.
the market with its own brand name. In short this full
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2.2. BACKGROUND ARCHITECTURE
The following Figure is a diagram of a typical Global Sys-
tem for Mobile Communications (GSM) network that was
used in the initial consultation, and it is included here to
help clarify the discussion below.
Figure 2.2: Diagram of a Typical Mobile Virtual Network (MVNO)
An MVNO is an organization which provides mobile
telephony services to its customers but do not have an
allocation of spectrum. The MVNO must use part of the
MNO’s network in order to provide services. The extent
which the MVNO would use the network elements of the
MNO. Most proponents of MVNOs indicated that there
was the most interest in ‘full MVNOs’. A full MVNO is
one with a Home Location Register (HLR), Mobile
Switching Centre (MSC), Authentication centre (AUC),
Equipment Identity Register (EIR) and associated signal-
ing capabilities. A Subscriber Identity Module (SIM) card
controlled by the MVNO is recognized as a key require-
ment of an MVNO. The MVNO would probably also re-
quire an Intelligent Network (IN) platform if it wished to
provide its customers with its own value-added services
rather than relying on those available from the host
MNO.
2.2.1 MOBILE STATION (MS)
The Mobile Station (MS) is a combination of terminal
equipment and subscriber data. The terminal equipment
as such as is called Mobile Equipment (ME) and the sub-
scriber’s data is stored in a separate module called Sub-
scriber Identity Module (SIM)
2.2.2 BASE STATION SUBSYSTEM (BSS)
The base station subsystem is responsible for managing
the radio network, and it is controlled by an MSC. Typi-
cally, one MSC contains several BSSs. A BSS itself cover a
considerably large geographical area consist many cells (a
cell refers covered by one or more frequency resources).
The BSS consist of the following elements:
BSC (Base Station Controller)
BTS (Base Transceiver Station)
TC (Transcoder)
47
2.2.2.1 BASE STATION CONTROLLER (BSC)
The BSC is the central network element of the BSS and it
controls the radio network. The base station controller
(BSC) provides, classically, the intelligence behind the
BTSs. Typically a BSC has tens or even hundreds of BTSs
under its control. The BSC handles allocation of radio
channels, receives measurements from the mobile phones,
and controls handovers from BTS to BTS.
The BSC is undoubtedly the most robust element in the
BSS as it is not only a BTS controller but, for some ven-
dors, a full switching center, as well as an SS7 node with
connections to the MSC and serving GPRS support node
(SGSN) (when using GPRS). It also provides all the re-
quired data to the operation support subsystem (OSS) as
well as to the performance measuring centers.
2.2.2.2 BASE TRANSCEIVER STATION (BTS)
The BTS is the network element responsible for maintain-
ing the air interface and minimizing the transmission
problems. The BTS parameters handle the following ma-
jor items; that kind of hand offs (when and why), paging
organization, and radio power level control and BTS
identification.
The BTS has several very important tasks, some of which
are presented in the following. Air interface, signaling,
Ciphering, Speech processing
2.2.2.3 TRANSCODER (TC)
The transcoder is responsible for transcoding the voice
channel coding between the coding used in the mobile
network, and the coding used by the world's terrestrial
circuit-switched network, the Public Switched Telephone
Network.
2.2.3 NETWORK SWITCHING SUBSYSTEM (NSS)
The Network Switching Subsystem (NSS) contains the
network elements MSC, VLR, HLR, AUC and EIR
The main functions of NSS are: Call control Charging,
Mobility management, Signaling Subscriber, data han-
dling
2.2.3.1 MOBILE SWITCHING CENTER (MSC)
The MSC is responsible for controlling calls in the mobile
network. It identifies the origin and destination of a call,
as well as the type of a call. An MSC acting as a bridge
between a mobile network and a fixed network is called a
Gateway MSC.
The MSC is responsible for several important tasks, such
as:
Call control
Initiation of pagin and
Charging data Collection
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2.2.3.2 VISITOR LOCATION REGISTER (VLR)
Visitor Location Register is integrated with the MSC. VLR
is a data base which contains information about subscrib-
ers currently being in the service area of the MSC/VLR,
such as:
Identification number of the subscribers.
Security information for authentication of the SIM card
and for ciphering .
Service that the subscriber can use.
The VLR carries out location registrations and updates. It
means that when a mobile station comes to a new
MSC/VLR it must register itself in the VLR, in other
word perform a location update. The mobile station lo-
cated in the own network is always registered in a VLR.
2.2.3.3 HOME LOCATION REGISTER (HLR)
HLR maintains a permanent register of the subscribers,
for instance subscriber identity numbers and the sub-
scriber services. In addition to the fixed data, the HLR
also keeps track of the current location of its customers.
As we will see the MSC asks for routing information from
HLR if a call is to be set up to a mobile station. Authenti-
cation center (AC) and equipment Identity Register (EIR),
are located in the HLR.
2.2.3.4 AUTHENTICATION CENTRE (AC)
The Authentication Center provides security information
to the network, so that we can verify the SIM cards (au-
thentication between the mobile station and the VLR and
cipher the information transmitted in the air interface
between the MS and the Base transceiver station). The
Authentication Centre supports the VLRs work by issuing
so called authentication triplets upon request.
2.2.3.5 EQUIPMENT IDENTITY REGISTER (EIR)
As for AC, the Equipment Identity Register (EIR) is used
for security reasons. But while the AC provides informa-
tion for verifying the SIM cards the EIR is responsible for
IMEI checking.
When performed the mobile station is requested to pro-
vide the International Mobile Equipment Identity (IMEI)
number. This number consists of type approval code, fi-
nal assembly code and serial number of the mobile sta-
tion.
2.3 TECHNOLOGY ENABLERS
2.3.1 SIM TOOLKIT
SIM toolkit is the GSM implementation of intelligent SIM
cards in mobile networks. SIM Toolkit offers extra func-
tionality than is available in older GSM SIM cards. Initial-
ly SIM cards were in effect ‘slave’ units within the hand-
set. They provided information when the handset or net-
work required it, and stored information that the net-
48
works required for authenticating and ciphering mobile
calls. The original concept was that a subscriber would be
able to use different phones on his/her subscription, ra-
ther than being tied to one particular phone.
2.3.2 CAMEL-IN
Customized Applications for Mobile Network Enhanced
Logic (CAMEL) represents the attempt of the GSM stan-
dardization community to implement Intelligent Network
(IN) technologies in mobile networks. The main concept
of IN being the flexible implementation of services in
public networks. This is done by having basic call func-
tions within the MSC/ GMSC and having the intelligent
service control functions in a centralized location which is
connected to all the MSC/GMSC.
It is recognized that another benefit is to the services of-
fered to roaming customers from another network. When
a subscriber roams his/ her service profile is transferred
from the home network to the host one. This contains a
profile of the value added services available on the roa-
mer’s home network. Subject to commercial agreement
between the two networks and the services being availa-
ble on the host network, these will be available to the
roamer. But they are the host network’s implementation,
and as such may appear ‘different’ to the roamer. That is
different key sequences are required to access them. With
CAMEL-IN the host network is only responsible for basic
call processing, the extra intelligence to provide value
added services resides in the home network. This means
that each call relies on intelligence from the home net-
work, and will need the home networks participation on
a call by call basis.
3.1 CALL GENERATION PROCESS OF AN MVNO
Though MVNOs provide mobile voice and data services
without owning the access rights to the spectrum they
use. Consequently, MVNOs can be described as a sub-
group of MNOs. The radio capacity used to provide these
services is gained through commercial agreements with
licensed mobile network operators (MNOs). MVNOs are
a new GSM phenomenon.
MVNO have its own brand name and number. So MVNO
has its own subscriber identity module (SIM), which is
memory device that store information such as the sub-
scriber’s identification number, the networks and coun-
ties where the subscriber is entitled to service, privacy
keys, and other user-specific information a subscriber.
The ID number of the SIM is given by the MNO or GSM
network from where the MVNO leased the frequency.
The ID number can be different from the MNO’s number.
With out SIM installed all MVNO mobile are identical
and no operational. It is the SIM card that gives subscrib-
er units their identity.
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When a MS made a call, it goes to the GSM network then
the GSM network operator transmits the call to the
receiver.
Figure 3.1: Call generation from a MS
So here we can see when a subscriber made a call from a
MVNO mobile device MS make a connection with the
GSM network of the MNO. So the transmission of the call
depends on the GSM network operator.
3.2 ECONOMIC SIDE OF MVNO MODEL
The main source of income derives naturally from the
customers. The customers pay for call connection and
services. The second source of income can be the inter-
connection payments from other operators. But, in order
to succeed an MVNO must be able to provide innovative
services since this is a unique source of income that it con-
trols totally. On the cost side, the MVNO has to pay to the
MNO for both outgoing and incoming calls. In addition, it
may need to pay interconnection payments to other oper-
ators for completing outgoing calls. Last, but not least, it
has also investment, marketing and operational costs. An
MVNO needs to reach commercial agreements with a
MNO concerning the charging for access to the radio
spectrum.
3.3 DISTINCTIVE FEATURES OF AN MVNO
Although there are many approaches applied while de-
fining MVNO’s; but the key point that is common in all is
that they use a completely separate product. Therefore, an
MVNO requires a distinct brand, so that the customer
feels as if he or she is using a completely separate net-
work. It also means MVNOs can profit from a greater
proportion of airtime charges incurred by subscribers,
provide related value added services (insurance, accesso-
ries) as well as premium subscription services. It differs
from the classic reseller model where resellers buy mi-
nutes in bulk and do not go much beyond delivering the
same services as the one offered by the network operator
at a more competitive price.
There is another characteristic that distinguishes MVNOs
from simple resellers. It is indeed not that they issue a
SIM card – the small slot-in card that defines the unique
identity of a mobile handset. No, the factor that makes an
operator truly virtual is the capability to control both out-
bound and inbound calls. Essentially, this means at least
owning its own switch. This means it then has control
49
over the cost of calls coming in to and going out from its
subscribers. It also means it controls its own service crea-
tion rather than relying on one operator to give it with
services.
3.4 MVNO BUSINESS MODELS
The different business models in the MVNO market are
based on how the value chain is restructured. Therefore,
four main business models that emerge are: Branded Re-
seller, Light-MVNO, Full-MVNO and Network enablers.
Branded reseller is the lightest MVNO business model,
where the venture just provides its brand and, sometime,
its distribution channels. While the mobile network oper-
ator (MNO) provides the rest of the business, from access
network to the definition of the mobile service offer.
Full-MVNO is the most complete model for a new ven-
ture, where the mobile network operator just provides the
access network infrastructure and, sometimes, part of the
core network, while the new venture provides the rest of
the elements of the value chain. This MVNO business
model is typically adopted by telecom players that could
gain synergies from their current business operation.
Light-MVNO is an intermediate model between a
branded reseller and a full-MVNO. This model allows
new ventures to take control of the marketing and sales
areas and, in some cases, increase the level of control over
the back-office processes and valued-added services defi-
nition and operations.
4. ADVANTAGES
Advantages that MNO could have by giving access to
MVNO’s are as follows:
By selling the network capacity to one or several
MVNO’s can bring new subscribers and traffic into
the network hereby broadening the customer base of
incumbent operators at zero cost of acquisition.
Selling of the capacity is also an efficient way to share
the network costs. MNO’s rather than resisting the
whole sale market if they embrace the whole sale
market by leasing out their IT service. This certainly
supports retailers (MVNO’s) but retailers brand can
take them to where MNO’s themselves can’t go.
Further, MVNOs may bring ready-made retail distri-
bution networks and online channels and the ability
to leverage experience and customers from other
businesses.
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4.1 WHERE ARE THE OPPORTUNITIES

The main business rational to launch an MVNO can be References
summarized in:
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2. Ability to deliver a differentiated value proposi- [2] www.mortricity.com/pdf/mvno/motricity_MVNO_withepap
tion and er_nov2005.pdf
[3] htpp://www.mobiliein.com/what_is_a_mvno.htm
3. Potential synergies with existing business.
[4] htpp://about.virginmobile.com/about/us/background
[5] htpp://www.answers.com/topic/mobile-virtual-network-operator
Therefore, the introduction of the MVNO model brings
[6] htpp://wwwtakashimobile.com/MVNO.html
opportunities to different types of players that can put
[7] Wierless communications principles and practice by theidor
together one or more of these elements.
s.rappaport
Companies that have a captive customer base are able to
[8] Economic validityof 3G mobile virtual network operators Varu-
develop an MVNO business. These companies can lever
tas,D. Katsianis, Th Sphicopouslos (University of Athens)
not only its brands awareness among their customers, but
[9] htpp://www.ofcom.org.uk/consult/condocs/sfr/sfr2/sfr.pdf
also their distribution channels to sell mobile services to
[10] htpp://www.itu.int/osg/spu/ni/3G/workshop/presentations/lewi
their current customers. These companies should consid- n_1.pdf
er the mobile service as a new product of their current
product portfolio or, inclusively, in some cases, as a new
private label. Additionally, companies that serve or sell
Md. Whaiduzzaman Completed his BSc in Electronics & Computer
products to niche market are able to develop an MVNO Science from Jahangirnagar University, Dhaka and MSc in Tele-
business. These companies normally have an exclusive communication and Compter Networking Engineering from London,
and non-replicable content and value added services that UK.He is a member of IEEE and British Computer Society.
can strengthen the mobile service value proposition.
Mahmudur Rahman has completed his BSc in Electronics & Tele-
Value added MVNOs have levered their existing brand, communication Engineering from Daffodil Inernational University,
taking advantage of a strong brand value and awareness. Dhaka
Their value propositions are normally developed with
differentiated and exclusive content and services. Their
offering is typically oriented to specific segments such as
budgeters with low spending power.

5 CONCLUSION
Mobile Virtual Network Operator (MVNO) is a GSM
phenomenon where an operator or company which does
not own a licensed spectrum and generally without own
networking infrastructure. Instead MVNOs resell wireless
services under their brand name, using regular telecom
operator's network with which they have a business ar-
rangements. Usually they buy minutes of use from the
licensed telecom operator and then resell minutes of
usage to their customers of MVNO. In this paper, we
have studied about MVNO, its types, concepts, network
architectures, how it use GSM networks, feature, strate-
gies, business models. We have a great opportunity for
establishing a MVNO network in our country. This will
be profitable for MVNO operators, MNOs and the sub-
scribers as well.