Syed Wajid
THE policy framework and opening of Mobile Virtual Network Operator (MVNO) licenses is yet another initiative taken by the Ministry of Information Technology and Telecommunication (MoITT) and the Pakistan Telecommunication Authority (PTA) to fast-track the digital nation vision.
This framework will enable smaller virtual operators to add value in niche markets that are difficult for conventional Mobile Network Operators (MNOs) to address, primarily through their innovative value-added solutions. The framework needs to be seen from the perspective of what it intends to deliver and how it supports both ends of the equation, the MNO and the MVNO, to partner rather than compete. It is important to examine the gaps that need to be filled to make the framework more adaptable as well as the winning factors that will be key for new entrants.
By limiting new entrants to billing and value-added service systems, the PTA has opted to go for “Thin MVNOs” instead of a “Full-Scale MVNO” model with a complete core network system sharing only the radio or wireless infrastructure of MNO. This strategy is totally aligned with the current market situation, where 5G rollout is in progress, fiber-to-the-site (FTTS) as a 5G access enabler is underway and the consolidation of MNOs from four to three players has already happened. In short, the time is ripe for a “Thin MVNO” model, which can support existing MNOs to enhance their revenues through a well-defined branding and niche marketing strategy. This stands in contrast to full-scale MVNOs, which are more suitable where the market capacity has matured and MNOs possess sufficient capacity, technical capabilities and a mindset to sell their capacity to the masses through a partner with its own brand and core network capabilities.
The framework supports existing MNOs through various restrictions on MVNOs, such as the mandatory utilization of the host MNO’s Long Distance and International (LDI) networks as well as their national and international roaming arrangements. The framework also binds MVNOs to utilize the host MNO’s numbering series and requires any network enhancements to be executed through the MNO. Such restrictions must not be taken as a bottleneck, but rather as a measure to encourage MNOs to view MVNOs as partners rather than a threat. On the other hand, independent branding and marketing, value-added services, mobile number portability (MNP) and agreements with multiple MNOs are allowed to support MVNOs to successfully launch their services.
However, some grey areas still need to be addressed by the regulator. Universal Service Fund (USF) contributions and the participation of MVNOs in USF projects need to be reconsidered as the framework does not allow an MVNO to have its own infrastructure, meaning all infrastructure deployment and leasing must be done through the parent MNO.
Additionally, MVNOs are being made responsible for the Quality of Service (QoS) in operational areas that are not within their control and are directly related to the MNO, such as call setup times and network uptime. MVNOs should be held responsible for their own systems, not those of the MNO. Furthermore, in the case of partnering with multiple MNOs, the objective of which is to cover network blind spots and quality of service gaps – the automatic selection of the best alternate network will not be possible and remain technically complex. This capability will require a base-level core network and a strong willingness from MNOs to cooperate. Ownership of the infrastructure deployed through MNO also remains in question and needs to be reconsidered.
While the Competition Commission of Pakistan (CCP) has made it mandatory for the newly merged entity “Merge Co” (Ufone plus Telenor) to open its capacity for MVNOs, no such mandatory requirement has been imposed on the other two major players, Jazz and Zong. Finally, the provisioning of value-added services requires open APIs by the host MNOs, which has not been made mandatory for any MNO through current regulations.
In a market with only three mobile network operators already in fierce price competition and low average revenue per user, targeting the masses with a new brand may not be a workable strategy. Selection of high-revenue niche markets with an already-known brand will be crucial for success, while offering gains for the host MNO. A well-drafted agreement with SLA in line with regulatory requirements will have a positive long-term impact. The CCP and PTA have placed legally binding conditions on the Ufone-Telenor MergeCo to open wholesale capacity to MVNOs on fair terms, which may be leveraged to negotiate a fair price-based contract. MoITT and the regulator may also remove anomalies in the framework before license acquisition.
—The writer is Telecom and IT expert with 30 plus years of experience.
