POTRAZ announced that they are finalising the licensing of mobile virtual network operators (MVNOs) in Zimbabwe. As you might know, the only licences we have here are for IAPs, mobile telecoms and fixed telecoms, broadly speaking of course. This move is meant to bring in additional competition in the sector and also customer-centric service provision.
How does licensing MVNOs lead to more competition? To answer that we need to understand what MVNOs are. Simply put, an MVNO is a cell phone service provider that does not own its infrastructure. They purchase wholesale service packages from MNOs (NetOne, Econet and Telecel in our case) and then resell the packages to the public. That sounds like infrastructure sharing because it kind of is.
So an MVNO buys data, voice and sms in bulk from the mobile network operators (MNOs) and then packages that to end users. MVNOs usually have limits placed on them, for example the data speeds offered being lower than those offered by the MNO. This allows them to be cheaper than the MNOs. The choice then becomes, 250mb for $1 at 1mbps from an MNO or 400mb for $1 at 250kbps from an MVNO for example.
The mobile operators would be interested in selling to a mobile virtual network operator if they have excess capacity thereby earning revenue from capacity that otherwise would have been underutilised. However this would appeal more to MNOs in a saturated market, of which Zimbabwe is not. The massive investments that MNOs have made would be prejudiced by these MVNOs.
There is a strong argument for why we should not be licencing MVNOs in Zimbabwe. That all becomes moot though as indications are that POTRAZ is going to force all MNOs to share their infrastructure. Companies like Econet can minimise the effects of MVNOs on their bottom line by getting into the game themselves. T-Mobile in the U.S has their own MVNO for example.
There are successful MVNOs around the world, Virgin Mobile being the best example. The markets in which they operate are different than the Zimbabwean market though. That MVNOs provide better customer service and bring innovation cannot be disputed. That’s how they survive. That should also push the MNOs to innovate themselves.
The director general of POTRAZ said that there is not enough spectrum to licence another MNO, so MTN is not coming anytime soon. MVNOs however are coming and should shake up the industry. Companies like Viva Mobile could finally rock this industry with the confidence of a licenced operator or at least provide options for us like FNB Connect did in South Africa.
Do you think mobile virtual network operators will succeed in Zimbabwe? Should MNOs be forced to engage MVNOs? Tell us what you think in the comments below.
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