Zimbabwe: Potraz Mulls Licencing Virtual Network Operators

25 August 2017

Telecoms

The Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) is finalising licence guidelines for virtual network operators, opening the door for a new class of players who will act like retailers for telecom service providers. Zimbabwe currently has three mobile network operators, Econet Wireless, Telecel Zimbabwe and NetOne and one fixed telecommunication operator, Telone.

Africom and Powertel are data networks operating limited mobile telecommunication services. Government has, however, been under pressure to license new players such as South Africa's MTN to allow for increased competition and improved services to subscribers.

POTRAZ said the country has limited spectrum to license new telecommunication companies and was working on various ways to accommodate new entrants into the sector. "The current licensing regime is being reviewed to allow virtual network operators (VNOs) to participate in the sector, thereby opening up the sector to more players at the downstream level. This is meant to boost innovation and competition through adoption of open access policies," POTRAZ director general, Gift Machengete. A virtual network operator is a wireless communications service provider that does not own the wireless network infrastructure over which it provides services to its customers.

According to international practices, the operator enters into a business agreement with an existing mobile network operator to obtain bulk access to network services at wholesale rates, and then sets retail prices independently.

A virtual network operator may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler.

Telecommunication experts assert that the entry of VNOs is expected to push down the cost of providing telecommunication services. Machengete said the licensing of VNOs would also result in the country's data tariffs significantly coming down. Zimbabwe currently has one of the highest data tariffs in the region. "We do believe that such VNOs and mobile virtual network operators will not only bring in additional competition to the market but will also bring about the much needed innovation and customer-centric service provision," he said.

Mobile virtual network operators' agreements with network operators date back to the 1990s, when the European telecoms market saw market liberalisation, new regulatory frameworks, better 2G network technology, and a subsequent jump in wireless subscriber numbers.

To date, there are over 1 017 virtual network operators across the world, with Germany, the United States, the United Kingdom, the Netherlands, France, Australia, Denmark, Spain, Poland, Belgiumand Japan leading the way.

South African telecommunications expert, Themba Napakade, however, said government's proposal to license VNOs would prejudice local mobile network operators that have already invested heavily in the sector.

"There is a case for mobile virtual network operators in a market that is saturated and developed, but then the case of developing countries, like Zimbabwe where you still battle to even get a proper signal and 2G or 3G let alone LTE, it does not make business sense for the operators to spend a lot of money and allow another entrant that will come in and disrupt their operations," said Napakade, who runs a telecommunications consultancy in South Africa.

He pointed out that since virtual network operators do not own or invest in infrastructure such as the telecoms switches, radio network and signalling equipment, base stations, ancillary power infrastructure, rating engines and the human locator registers, the central repositories of all users or subscribers of an telecoms operator, they would prejudice those who have already invested.

Source: Financial Gazette