Virtual Network Operators: A Revolutionary Step In Zimbabwean Telecom Industry

The recommendation by POSTAL AND TELECOMMUNICATIONS REGULATORY AUTHORITY OF ZIMBABWE (POTRAZ) to implement Virtual Network Operator (VNO) is welcome news to the telecom industry that is facing innumerable challenges. Most MNOs have long faced issues creating a profitable business model out of their telecom investments. Be it spectrum licensing or telecom equipment or fibre investments, Zimbabwean telecom operators need to be extremely positive while investing in the market. For years, this has been negatively impacted the growth of the telecom market in Zimbabwe since only one or two players have been making investments in the country.

The “V” in the initialism “MVNO” stands for virtual. They virtually operate networks by renting infrastructure. VNOs do not possess a telecom network infrastructure; but, they provide telecom services by acquiring the required capacity from other telecom carriers. These network providers are classified as virtual because they offer network services to clients without possessing the actual network. VNOs typically lease bandwidth at approved wholesale rates from different telecom providers and then offer services to their direct customers.

On many incidents in the past, Zimbabwe telecoms had locked horns with the Government, primarily due to the fact that most of them are unable to build a viable business model from the existing telecom regulations.

As of this year mobile network operates will be able to expand their services by leasing out their established infrastructures to VNOs. However, the VNO model is comparatively new to the Zimbabwean market as opposed to the American, Asian and European markets.

Fully virtual VNOs do not need or do any technical support or technical facilities; instead, they depend on infrastructure providers for technical or support-related matters. The VNO model has got a great deal of power in the wireless sector as the infrastructure expenditures are substantial.

One thing that MVNOs don’t provide is data roaming. The big cellular carriers actually rent out broadcast spectrum to each other, but charge each other for this service.

MVNOs operate on slim margins, and adding roaming would increase the rates that they charge. Fortunately, the vast majority of users don’t require data roaming. However, for those who travel frequently, and demand constant data access, roaming is a necessity.

To cater for different business models, technology evolution and competitive dynamics, the following MVNO Licence categories are proposed:-

7.1.1. Full-MVNO

This is a Mobile Virtual Network Operator which owns and operates the core network and other platforms such as billing and customer services platforms and relies on Mobile Network Operators for the Access and Distribution Network segments, to provide Mobile Services.

7.1.2. Light-MVNO

This is a Mobile Virtual Network Operator which owns and operates platforms such as billing and customer services platforms and relies on Mobile Network Operators, for the Core, Access and Distribution Network segments, to provide Mobile Services.

7.1.3. Branded reseller

This is a Mobile Virtual Network Operator that uses its brand and its distribution channels, to provide Mobile Network Services riding on the core and access networks and other platforms such as billing, Customer Management Systems and Value Added Services of a Mobile Network Operator.

MVNOs function as middlemen for wireless spectrum. They buy in bulk and sell to customers for far less than the big carriers. For example, a $60 cost from Econet costs around $30 from an MVNO on the same network. On the downside, MVNOs don’t offer data roaming and sometimes suffer prioritization, or call degradation at peak hours.