Potraz completes rules for virtual mobile firms

Zimbabwe has completed the drafting of a framework meant to define operational modalities for mobile virtual network operators (MVNOs) amid indications there is growing interest and enquiries on the model.

The industry regulator has since submitted the framework to Government for review after which it will be forwarded to the Attorney General's office for drafting into statutory regulations for the industry.

The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) said this comes on the back of growing enquiries about progress in crafting the regulations to govern the operations of MVNOs.

An MVNO is a reseller of wireless communications services. With Government having taken a position to license, at least thus far, only 3 mobile network operators, MVNOs present the only opportunity for new entrants in the industry.

MVNOs rely on infrastructure sharing in order to deploy services, and though infrastructure sharing is common practice in developed markets, there is a limited number of developing markets where this is enforced by a regulatory body.

MVNOs lease wireless capacity (purchases "minutes") from a third-party, MNO, at wholesale prices and resell to consumers at reduced retail prices under its own business brand.

Zimbabwe currently has only three MNOs namely the Strive Masiiwa owned Econet Wireless, wholly State owned NetOne and Telecel Zimbabwe, in which the State is partial shareholder, but with a controlling 60 percent stake in the company.

According to the regulator, Potraz, the regulations would allow MVNOs to enter the Zimbabwe market and roll out services using the idle capacity of mobile network operators (MNOs).

Already, Zimbabwe has developed a set of infrastructure sharing regulations, which were completed in 2016 and provide guidelines on the modalities for sharing facilities in the sector.

Potraz director general Gift Machengete told The Herald Business that Potraz completed the framework last year and submitted it to the Ministry of Information Communication Technology, Postal and Courier Services for evaluation and approval.

"We have sent the framework to the Ministry (ICT, Postal and Courier Services). But we are yet to find out if it has been sent to the Attorney General's office," Dr Machengete said.

The Potraz boss said there had been huge interest from investors who are keen to partner local MNOs with idle capacity on their infrastructure that can be used provide services.

"The interest is there, people have been calling and asking to say ‘where are you with the regulations'," Dr Machengete said. He said there were innovative operators who may not be able to put up infrastructure, but can roll out telecoms services.

He stressed that with demand by MVNOs to explore opportunities, they were moving forward to create conditions that will allow investors with innovative ideas to come.

In South African MVNOs industry is gaining traction and has attracted big players such as Lycamobile and Washirika Holdings with juicy pockets to compete aggressively with MNOs.

MTN recently announced that it will start hosting MVNOs, and will become only the second MNO to do so after Cell C.

Globally, MVNOs business model has become more popular and subscriptions are growing at 18 percent annually compared to the total mobile market growth of 4 percent.

However, studies have shown that only three out of every four MVNOs manage to successfully setup and sustain their business.

Dr Machengete said regulations passed in 2016 will make it fairly easy for new entrants to have business models that depend on the infrastructure which has already been built by MNOs.

The Potraz boss said that they were monitoring the level of sharing infrastructure, which had faced some hurdles at first. "That was historical. Yes, there was a time when problems were there, but people talk and iron out differences.

"The regulations passed in 2016 are now fully functional, operators are agreeable on the need to share infrastructure. Potraz came up with terms of sharing the infrastructure," he said. Interested MVNOs will have lease agreements with MNOs.

As with most industries, a favourable regulatory environment encourages entry of new MVNOs and creates a good market environment that ultimately benefits the end customer.

MNOs such as Verizon Wireless and T-Mobile sell to MVNOs because the networks have extra capacity that would otherwise be unused. Rather than taking a loss, MNO make a small profit by wholesaling some bulk capacity.

MVNOs can afford to mark down their retail prices to a certain extent because they do not have to pay radio frequency spectrum licenses and they have no infrastructure to build or maintain.

Since MVNOs have low overheads, they can spend aggressively on marketing to increase chances of selling minutes to consumers.