LIBERALISATION BOOSTS VIRTUAL OPERATORS, ACCORDING TO MTN EXECUTIVE

Telecoms

Next year could see the rise of the “virtual operator” as telecommunications liberalisation moves into top gear, says MTN's group executive Yvonne Muthien.

Speaking to ITWeb today during the Telecoms World Africa conference in Cape Town, Muthien says fixed-wireless will probably emerge as the dominant telecommunications technology. This market space, including value-added network services (VANS) and Internet service providers, would prove to be the most dynamic.

Last month government announced sweeping telecoms market liberalisation changes that are expected to change the face of the local telecoms industry.

“Market liberalisation has brought about the emergence of an interesting and new competitive landscape for the telecommunications market, but there are still a number of issues that will have to be clarified.”

Muthien says the most interesting aspects will possibly be a spate of joint ventures, mergers and acquisitions, and the emergence of new niche market players that will stimulate the competitive environment.

She defines a “virtual operator” as a company that leases infrastructure from one of the dominant players in order to provide a telephone service to a specific area.

“A prime example would be the Universal Service Agency Licences (USALs) that would lease infrastructure, Internet capacity and purchase bulk airtime for the areas they service,” Muthien says.

Government, as a means to supply telecommunications services to mainly rural areas, has created the USAL concept. So far, three such licences have been issued and more are expected before year-end.

Muthien says the profit margins for such USALs, or virtual operators, would be small and so their major challenge would be managing costs.

“However, that will help lower the cost of telecommunications for the consumer and small businesses.”

As far as regulatory issues are concerned, Muthien says several issues have to be clarified, with the two major ones being international connectivity and interconnectivity.

“VANS will be able to have their own international connections only for voice over Internet Protocol applications, but mobile operators will not have an international connection – which implies that we are seeing an ‘asymmetrical liberalisation process'.”

Muthien says there are still many other grey areas and more clarity is needed on the parameters for the various operators that will emerge after 1 February 2005.

“Legalising self-provisioning for the mobile operators has been an important step as it allows us to resell spare capacity.”

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