POTRAZ gets it right for a change

LAST week, the Postal and Telecommunications Regulatory Authority (POTRAZ) launched stakeholder consultations on licensing of Virtual Network Operators (VNOs).

The consultations close at the end of this month.

In basic terms, the regulator is reaching out to stakeholders so that they can craft regulations and provisions on how the licensing will be effected. It is the regulator's constitutional mandate to encourage competition, ensure a level playing field and maintain a technology neutral stance and to make significant contributions to the success story of the Information Communication Technology (ICT) sector in Zimbabwe. This is what the authority was formed to do. The consultations on VNOs are a positive step.

A VNO is a reseller of network services from other telecommunications suppliers and does not own the telecommunication infrastructure; the most popular one being a Mobile Virtual Network Operator (MVNO). In this set up the MVNO does not own any infrastructure, but rides on existing capacities from existing operators. This adds weight to the infrastructure sharing concept. The existing wireless cannot access some markets for different reasons. Use of MVNOs builds quick capacity to access these niche markets. The good thing is that the MVNO does not have to worry about availability of switches, routers, base stations, billing servers, backup power because these are already owned by licensed Mobile network operators.

MVNOs come in different shapes and models and POTRAZ is proposing four licensing regimes: Namely a full MVNO, light MVNO, a Mobile Virtual Network Enabler and a branded reseller. These basically vary in their extent of service packaging, pricing, and billing systems and value-added services. The type of MVNO is determined by how "thick" or "thin" their technological layer is over its access to its host MNO's network. This goes without saying that for any MVNO to succeed anywhere they must establish a good working relationship with the parent network.

This is a positive development if implemented properly. One does not need millions of dollars to setup a network for his favourite football team. In South Africa one leading church is already launching an MVNO for its followers. This is where the unlocking of value comes in. Assuming the church has 500 000 members and the church manages to sign up 100 000 members to the "Khuleka Mobile", this literally translates to 100 000 like-minded people who will have access to services on the same network at very competitive rates. And add to that, the in network calling feature can literally be free. What I mean is, if one church member based in Victoria Falls wants to call one of the pastors based in Mutare, he/she can dial in and request a prayer and be on the phone for as long as the phone battery life allows.

But how is the money made?

The MVNO can offer its services in two packages. Basic, which comes with 100 voice minutes, 2 gig (G) data, 200 text messages and an advanced one which comes with 500 voice minutes, 5G data, 500 text messages.

The basic and advanced packages can be pegged at flat prices of US$20 and US$50 respectively. This translates to about 100 000xUS$35 = US$3,5 million per month. This is an example to explain how the revenue is generated. This is good for the MVNO, the network owner, Zimbabwe Revenue Authority, POTRAZ and the church members. No rocket science.

The above example shows how a strong brand can be monetised using the MVNO model. Other models follow branding of SIM cards and top up cards. These are more customer facing issues and have low start up costs as long as you have done thorough research about the market that you want to mobilise. Any strong brand can become a light MVNO — literally.

The document requesting contributions is available from the regulator website www.potraz.gov.zw. In that document the regulator solicits feedback on different aspects of the proposed MVNO licensing schemes. I have browsed through it and it looks pretty standard. The prices for licences look reasonable ranging from US$500 up to US$50 000. I however, have a few questions and comments directed to the authority based on the stated information in that document. I will try to summarise them here.

Section five says: "There is also a need to open the market for new partnerships, including wholesale and retail arrangements."

Comment: If that indeed is the case, then it should be possible to licence international traffic carriers since the authority claims that it wants to make the sector more competitive. The area of wholesale voice termination has been heavily monopolised and semi-militarised to a point where terminating calls from outside Zimbabwe attracts a jail term. We expect that the MVNO will be allowed to carry wholesale voice traffic otherwise this would be a big farce.

Section 7.1.2 talks of Light MVNOs.

TwitterComment: Do we really need these? I mean at one point the authority granted 14 internet access providers licenses to local operators and what happened to them? Zimbabwe's population is no more than 15 million and we do not expect it to double in the next 10 years to warrant so many players in the field. Hopefully the total number of full MVNOs and Light MVNOs makes statistical sense, unless you are fundraising by issuing many licenses.

Section 7.2 Tier 2 network providers - Village

Comment - On Tier 2 network providers licenses are broken down as national, provincial, metropolitan, district and village level. POTRAZ, let us be a bit serious here. You want to have village licenses? There are two possibilities to this. You might claim that you are opening the market to everyone which is good, but the district level should take care of the village? I stand to be corrected. How many small operators do you want to have in the end? 10 000? If that is the case then bingo you are in business as you will smile all the way to the bank and at the same time keep yourselves employed. I mean monitoring 10 000 village operators is not a joke.

The other flip side of this is a bit disturbing. My researched opinion and little public knowledge about the regulator compels me to air my fears with reference to the village operator.

A typical village has less than 5 000 people. Some people in the human rights arena think that this is the first step towards setting up a mechanism to monitor voice and data from individuals. Their concerns are pretty reasonable. Monitoring and intercepting voice and data to and from end users is not exciting business. This always invokes the security versus privacy debate. I will not delve deeper into that. It is self explanatory.

Send the village operator concept to the recycle folder or else the next thing you will be saying you are now licensing internet cafes and WiFi hot spots! We do not need a village operator. I doubt if we even need a district one.

You must realise that the regulator has been dealing with issues that are counter-productive for the ICT industry. The blame game on data pricing, the several clashes with mobile operators, the introduction of floor pricing and the public announcements on media that "we will not tolerate predatory pricing," among other things do not echo the regulator's responsibility in creating a level playing field. If anything at all, some observers believe that these few blemishes are making the regulator look like more of a disabler than an enabler.

People must understand that the days of legacy infrastructure are gone. We are now talking about zero Capex operators. Telco is in a box. Get up and go kind of business. The days of a few operators forcing their way into our pockets because of lack of options for alternative services are gone. The MVNO initiative is a good starting point to get abreast with the fast changing ICT contour.

In summary, the concept and idea to push for MVNOs is noble and above board.

Wider consultations are, however, needed so as to safeguard this otherwise ingenious effort. For a change POTRAZ has remembered what it was set up to do and thumbs up for that. I urge you to download the document from the regulators website and make your own contribution. Or you can app me to get a soft copy.

Robert Ndlovu is contactable on WhatsApp +263776002605 or e-mail ndlovu@Ymail.com or on Twitter handle @robertndlovu.