LICENSING OF MVNOs IN ZAMBIA - ZICTA Paper - Licensing of MVNO.pdf · MVNO DEFINITION OFCOM An MVNO is an organization that offers mobile subscription and call services to customers

LICENSING OF MVNOs IN ZAMBIA

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LICENSING OF MVNOs IN ZAMBIA Markets Competition & Licensing Department

Consultation Publication date: 11 September 2015 Closing date for responses: 9 October 2015


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ABOUT THIS DOCUMENT

The communication sector in Zambia has grown since the liberalization of the economy

in the early 1990s. Mobile Network Operators (MNOs) were introduced during the

second half of the 1990s and by 2003 there were three entities competing in the mobile

sector. The scenario has not changed over a decade later.

The mobile cellular industry has seen reduced levels of growth in the subscriber base

for the mobile cellular operators. The Information and Communications Technology

Annual report of 2014 showed that the mobile cellular subscribers had reduced by 3

percent to 10.1 million in 2014 as compared to the figures of 2013. The mobile

penetration levels stood at 65 percent which was not good enough for the sector. This

therefore posed a challenge to ZICTA to ensure that interventions were made to

accelerate growth in the sector.

This document looks to explore the option of licensing Mobile Virtual Network (MVNOs)

to enhance mobile industry performance and consequently increase growth in the

sector. The paper also provides information on how the MVNO business model works,

the types of MVNO business models, how they are regulated in various jurisdictions,

and the existing licensing framework in Zambia and its implication on MVNOs.

Consultation questions have been formulated so that the public could also provide their

views.

The public comments will be taken into account before the Authority makes a

determination on whether or not the Zambian ICT market is ready for the introduction

of the MVNOs.

The consultation closes on 9 October 2015.

Responses

How to respond to this consultative paper:

E-mail: Mr. Isaac Nonde and Mr. Elly Longwe using the following e-mail addresses


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[email protected]; [email protected] or

You may post your written comments to the following address

The Director- Markets, Competition and Licensing

Zambia Information and Communication Technology Authority (ZICTA)

Stand No. 4909, Corner of Independence & United Nations Avenues

P.O. Box 36871

Lusaka - Zambia

General Lines: +260 211 1244424 /241236

244426/246702/244427

Fax: +260 211 124 6701

Email: [email protected]

Website: www.zicta.zm

Confidentiality

The Authority shall endeavour to keep any views and comments received during this

consultative process very strict and confidential.

mailto:[email protected]



http://www.zicta.zm/


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CONTENTS

INTRODUCTION ............................................................................................. 4

MOBILE VIRTUAL NETWORK OPERATORS .............................................................. 6

REGULATING AND LICENSING ISSUES .................................................................. 13

INTERNATIONAL EXPERIENCE ........................................................................... 20

CONCLUSION ............................................................................................... 22

ANNEX: CONSULTATION QUESTIONS .................................................................. 23

REFERENCES ............................................................................................... 24


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CHAPTER 1

INTRODUCTION

1.1 The Zambia Information and Communications Technology Authority of Zambia

(ZICTA) has the mandate to promote competition among persons engaged in

commercial activities relating to, or in connection with the provision of the

information and communication technologies (ICTs) electronic communication

services and to ensure efficiency and economy on the part of persons so engaged.

1.2 The Zambian communication sector has seen growth since its liberalization in the

second half of the 1990s. The introduction of Mobile Network Operators (MNOs )

resulted in widespread telecommunication infrastructure development in many

parts of the country. The competition brought a number of benefits such as

improved choice, lower tariffs and better quality of mobile services.

1.3 However, the total number of mobile cellular subscribers declined in 2014 to 10.115

million as compared to 2013 and 2012 figures of 10.396 million and 10.525 million

subscribers respectively. The reduction was mainly due to sim card registration

carried out in 2014.Of the three (3) MNOs currently operating in the country, MTN

Zambia Limited and Airtel Plc have 85 percent of the market share whilst the

remainder of 15 percent is held by Zamtel, the state- owned operator.

1.4 There has been deceleration in growth of annual subscribers in the global mobile

industry. This therefore has resulted in stagnation in revenues from the

telecommunication industry. Studies have shown that demand in the market is

shifting from conventional mobile communication or voice services to a wider

portfolio including internet access, entertainment and many other value added

applications.


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1.5 The shift in service preferences has resulted in the appearance of specific customer

segments, commonly known as niches. The MNOs have grown in terms of their

market share and therefore it has become a challenge to grow their market base

further because the niche markets would require unique solutions. Therefore

smaller operators could target these niche markets and offer more differentiated

services.

1.6 The concept of MVNOs has been around for more than two decades and of the total

world number of MVNOs, Europe has almost two-thirds of these followed by Asia

Pacific and North America whilst Sub-Sahara Africa is still in its infancy. According

to the GSMA Intelligence, MVNOs reached over 900 worldwide by the end of 2014.

1.7 This paper on the licensing of MVNOs is aimed at providing an information base that

could kick start the debate as to whether the Zambian Mobile industry is ready for

such operators.


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CHAPTER 2

MOBILE VIRTUAL NETWORK OPERATORS

2.1 Definition

2.1.1 There are varied definitions of Mobile Virtual Network Operators (MVNOs) by

regulatory bodies worldwide and how they are regulated depends on the extent

of reliance on facilities of MNOs. The table below shows various definitions

adopted by some Regulatory agencies;

INSTITUTION

MVNO DEFINITION

OFCOM An MVNO is an organization that offers mobile subscription

and call services to customers but does not have an

allocation of spectrum

ITU A mobile Virtual Network Operator (VNO) is an operator that

offers mobile services but does not own its own radio

frequency. Usually, this operator has its own network code

and in many cases issues its own SIM card. The mobile VNO

can be a mobile service provider or a value added service

provider

Federal

Communications

Commission

An MVNO arrangement is one in which “a network operator

acts as a wholesaler of airtime to another firm, which then

markets itself to users just like an independent operator

with its own network infrastructure.”

Office of the

Telecommunications

Authority of Hong

Kong (OFTA)

At the highest level an MVNO may be viewed as an

organization that offers mobile subscription and call

services to customers but does not have an allocation of

spectrum, rather it relies on hosting its service on a licensed

Mobile Network Operator


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2.1.2 MVNOs could be categorized, non-exclusively, according to the kind of service

offering they approach the market with;

Facility-Based MVNOs: These have some network infrastructure of

their own;

Target Market Based MVNOs: These operate as discount MVNOs or

offer services in lifestyle-based market niche segments. Discount MVNOs

offer lower prices whilst those that are lifestyle based provide

differentiated services through value addition;

Strategy-Based MVNOs: These have different strategies such as being a

low cost international MVNO, a brand extension MVNO, a youth-focused

MVNO and network carrier MVNOs.

Plan-Based MVNOs: These either offer prepaid or post-paid plans.

2.1.3 The following proposed definition is put forward for the Zambian electronic

communications sector:

“An MVNO licensee is an entity that has not been assigned spectrum for

provision of mobile cellular services but is able to provide mobile cellular

services to customers by using the spectrum assigned to a Mobile Network

Operator by the Authority.”

Question1: Do you agree with this definition? If not, what is your proposed

definition and provide reasons?

2.2 Need and Timing for entry of MVNOs

2.2.1 The Zambia ICT regulator has a major role to play in ensuring that the Mobile

industry continues to be effectively competitive. The trend in mobile subscriber

numbers since 2012 has not been positive enough and the Regulator has to

intervene and firmly do so. The mobile penetration at the end of 2014 stood at


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65 percent and the country would do much better with penetration levels of

above 100 percent.

2.2.2 Therefore, it could be stated that there is still room for growth in the mobile

sector as many people are still not being effectively serviced by the existing

mobile service operators.

2.2.3 MVNOs are expected to target niche markets and thus provide services that

would properly satisfy the needs of these particular consumers groups. The

mobile industry has seen the rise in value added services such as caller ring back

tones (CRBT), entertainment such as music on demand (MoD) and games as well

as various other interactive voice response (IVR) platforms for information and

educational value added services. Therefore, MVNOs could enhance such services

for their particular markets much more effectively as they would concentrate

their innovative efforts as opposed to having mass markets as the case is with

MNOs. Therefore, an MVNO would have to be more innovative in order to

compete in the mobile industry.

2.2.4 Currently, MNOs in Zambia are changing their business models in order to be more

efficient and reduce operational costs. Introduction of MVNOs could be another

aspect that would bring some benefits to the MNOs which could increase market

share.

2.2.5 Some general benefits that could result for MNOs by offering wholesale access to

their networks include the following;

Extending mobile services to market segments not adequately accessed by

the MNOs;

Market expansion by reaching entirely new or underserved market segments

or geographical areas;

Better network utilization and realization of economies of scale.

2.2.6 There are however concerns that MNOs would have regarding allowing MVNOs

and these include;


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Cannibalisation of the MNOs market share by MVNOs;

Backlash from poor MVNO performance;

Adverse selection of MVNOs for partnering purpose.

2.2.7 Experience has shown that even entities outside the communication industry

could become MVNOs. These entities could include, a seller of a popular

beverage, an airline, a bank and so on. They would opt to become MVNOs in

order to enhance their brands. They would target market segments that love

their brand and differentiate the mobile service offering to specifically cater for

their unique needs. For instance, an airline would provide roaming services

through the MVNO to their international clients.

2.2.8 In most cases it would be expected that an MNO and MVNO do not compete in

the same market. An MVNO would have to be very creative to ensure that it

offers differentiated services to a specific target market more efficiently than

an MNO could do. This would require an MVNO to have some form of

infrastructure such as a switch or an intelligent network platform.

2.2.9 The Zambia mobile cellular market has varied customer types. These would

include a large population of the youth, international communities, students and

the elderly who have varied communications needs which could be effectively

catered for through MVNOs. These groups have also varying financial capacity

which could determine what rates could be charged by the MVNOs. Further, our

Zambian market still has room especially for differentiated services that can be

offered by the MVNOs. It is anticipated that the MVNOs will be targeting

subscribers in urban areas as opposed to rural areas and hence they will be

competing for the same subscribers with the MNOs.

2.2.10 The availability of 3G mobile systems provides an important base for the

introduction of an MVNO market. 3G spectrum allows for the enhancement in

the transmission rates so that mobile applications namely video, voice and many

other data services can be made easily available. It would therefore be expected


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that MVNOs would increase capacity utilization of the MNO Radio Access Network

and improve spectrum utilization in the 3G networks.

Question 2: Do you think it is necessary to introduce MVNOs into the

Zambian Telecom Market? If so, should a limit be set of how many are

introduced? Please provide adequate information for your answer.

2.3 Regulating MVNOs

2.3.1 Jurisdictions across Europe, Asia Pacific and the Americas have different

approaches on how they treat the MVNO market in terms of regulation. Some

regulators have put regulations that allow MNOs to share their infrastructure

with MVNOs and in other countries there is no regulation requiring MNOs to do

so.

2.3.2 In some countries, MVNOs are required to have wholesale agreements before

they are licensed or authorized to operate by the regulators. The MVNOs must

have adequate resources to commence operations and effectively compete in

the mobile services retail market.

2.3.3 The MVNOs are categorized into three types, namely Full, Intermediate and Thin.

The MVNOs are defined as follows;

Full MVNOs – these are full infrastructure MVNOs that have complete

control over the operations, data and services launched due to certain

core network nodes such as the GMSC (Gateway Mobile Switching Centre)

or HLR (Home Location Register). Such MVNOs operate in similar way to

any MNO, but without their own radio network. Full infrastructure MVNOs

also have their own SMSC (Short Message Service Centre), MMSC

(Multimedia Messaging Service) and GGSN (Gateway GPRS Support Node)

allowing full control over all the services they offer in the market and


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flexibility in designing and deploying new services. Full service MVNOs can

have their own roaming and interconnect agreements.

Intermediate MVNOs- in addition to their own billing and customer care

processes, intermediate MVNOs also known as enhanced service providers

usually have their own infrastructure which allows them to have complete

control over their business and service offerings. The enhanced service

providers usually run their own value added services platforms such as

voicemail, missed call notification, VPN.

Thin (Reseller) MVNOs -they usually have a well-known brand and a

complex retail infrastructure and focus on sales and on leveraging

customer relationships. They resell services on margins, the pricing being

agreed with the MNO. They have control over their sales and marketing

processes, but they usually differentiate only on pricing, brand identity

and value.

Sales Radio

Access

Mobile

Switching

center

Network

Services

Applicatio

n Services Billing

Customer

Care

Distributio

n

Marketing

and

Branding

MNO

MNO

Full MVNO

Intermediate MVNO

MNO


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2.3.4 Entry by an MVNO into the mobile industry is treated differently by various

jurisdictions around the world. In certain instances MNOs are mandated by the law to

allow MVNOs wholesale access to their network (Denmark, Hong Kong) whilst in others

there is no such requirement (USA, UK).

Question 3: Do you think ZICTA should make the MNOs share their

infrastructure with MVNOs through enactment of legislation? What type of

MVNO would be most appropriate for Zambia? What niches or areas do you

think these MVNOs should serve? Please elaborate your responses with

appropriate reasoning.

MNO Thin MVNO


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CHAPTER 3

REGULATING AND LICENSING ISSUES

3.1 Issue of License

3.1.1 The introduction of MVNOs to the Zambian market would be expected to impact

the way MNOs conduct their businesses and thus their reactions to such a

development would be varied. Therefore the Regulator would have to ensure

that it puts in place measures that would allow for entry of MVNOs into the

market with minimal barriers. The measures would include sharing of both

passive and active elements of the MNO infrastructure. The spectrum, which is

the major resource, would have to be shared by the MNO with the MVNO.

3.1.2 The Zambia Licensing Framework provides for licensing of MNOs and mobile

service providers. These licenses are issued through a competitive process.

Therefore it would be expected that the MVNOs licenses would have to be issued

through an open licensing process under the class category to promote entry into

the sector.

3.1.3 The ICT Act No. 15 of 2009 in section 43 provides for the process of accessing

any element of electronic communications network of a licensee. However, this

law only applies to entities that are licensed. It would therefore entail that

MVNOs would have to get licensed before they get into any access agreement

with the MNOs. However, it would be advisable that the MVNO obtains a tentative

service agreement with the MNO before applying for a license with ZICTA.

3.1.4 The ICT Act under section 34, states that a radio spectrum license shall not be

bought, sold, leased, mortgaged or charged, or in any manner assigned, demised

or encumbered. This provision would pose a challenge in view of MVNOs access

to the radio spectrum from the MNO.


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3.2 Scope of MVNO services

3.2.1 Licensing Process

The mobile operators were licensed under the repealed Communications Act of

1996 which was later replaced by the Information and Technologies Act of 2009.

The Act of 1996 provided for a competitive process as a means of licensing a

mobile operator and the licenses issued were that of service with appropriate

frequency spectrum assignment.

The new licensing framework under the ICT Act of 2009 provided for licensing of

mobile operators under the Guidelines of June 2010. A mobile license is classified

under the individual category which is defined as follows;

These are major network or service licenses with significant economic and social

impact and significant regulatory obligations. This License may also require the

extensive use of radio frequency spectrum and other finite resources.

The guidelines further provide the procedure of issuing such a license as

stipulated in the following paragraph;

These licenses shall be issued conditionally through a competitive process

announced at the instance of the Authority, which announcement will include

the mode, procedure and other pertinent issues related to the issuance of the

license such as performance guarantee. Note that the Authority will determine

the procedure to be followed depending on the type of license to be issued.

The mobile licenses are divided into two categories namely the Network and

Service Licenses. These licenses are defined as follows;

a) Network License: This license category allows the holder of the license

to construct, own or make available an electronic communications network, or

to provide a network service; and


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b) Service License: A license holder under this license category is allowed to

provide one or more electronic communications services.

3.2.2 Mobile license scope

A mobile license for both Network and Service has duration of 15 years and the

following is the scope;

i. Construction and installation of the mobile cellular network.

ii. The Licensee shall interconnect the mobile cellular network with the

Public Switched Telephone Network (PSTN) for origination or termination of

calls from or to a cellular subscriber.

iii. The Licensee shall interconnect with the PSTN so as to make available to

the consumers the long distance and international services of the PSTN

operator.

iv. Provision of cellular services by the Licensee to subscribers over the

mobile cellular network

v. In addition, the Licensee shall provide such other or further services,

which shall include but not be limited to mobile cellular voice, mobile cellular

data, and mobile cellular internet, voice messaging and facsimile.

vi. The Licensee shall be permitted to sell Mobile Subscriber Radio Units

(MSRU) to the general public, provided that all MSRU’s sold must be type

approved by the Authority.

3.2.3 License Fees

The Statutory Instrument no. 34 of 2009 provides the license fees applicable to

a mobile license as follows;

a) Network License

Application Fee- K16, 666.80 +16% VAT

License Fee- K1, 200,000.00 +16% VAT

b) Service License

Application Fee-K16, 666.80 +16% VAT

License Fee – K3, 200,000.00 +16% VAT


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3.3 Terms and Conditions of a Service license

The following are the generic terms and conditions that apply to any service

licensee that would also be expected to be issued to an MVNO upon being

licensed.

3.3.1 Commencement and Duration of License

This License shall come into effect on the date it is issued and shall remain valid

for a license period to be stated in the issued license.

3.3.2 Renewal of the License

i. The License may be renewed upon the licensee’s written notice to the

Authority which notice shall be submitted not less than three (03) months

prior to expiration of the term of this license.

iii. The Authority shall renew the license in accordance with the

Information and Communication Technologies Act No. 15 of 2009 (the

“ICT Act”) on substantially the same terms and conditions as those

applicable to the licensee during the preceding license period provided

that the licensee has not been in material breach of the license

conditions.

iv. The license shall terminate upon expiry of the license period if it is not

renewed.

3.3.3 Provision of Services

i. The Licensee shall provide services in accordance with applicable National

and International standards.

ii. The licensee shall commence provision of services within a period of six

(6) months from the effective date of the license.


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3.3.4 Ownership and Corporate Obligation

The Licensee shall comply with the following conditions on ownership;

i. To furnish the Authority with a copy of their shareholding structure

as required by the Licensing regulations.

ii. To notify the Authority in writing of any changes to its ownership

and control structure.

iii. To notify the Authority of any joint venture into which it enters

with any other person or entity holding a license issued by the

Authority.

3.3.6 Safety Measures

The Licensee shall in respect of services operated, maintained or offered

under this license take proper and adequate safety measures to safeguard

life or property, including exposure to any electrical emissions or

radiations emanating from equipment or installation from such

operations.

3.3.7 Universal Service Obligation

The Licensee shall comply with the Universal Service/Access obligations

as may be provided for under the ICT Act and any regulations issued

thereunder or any Guidelines and rules issued by the Authority.

3.3.8 Quality of Service

The licensee shall comply with and abide by the minimum requirements

set out under the ICT Act or any other law, or guidelines published by the

Authority or any international standard to which the license requires

adherence.


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3.3.9 Complaint System

The licensee shall establish an efficient and easy to use system to receive,

process and respond to complaints or claims by network users or

subscribers related to the network, or any other item relating to the rights

exercised by the licensee pursuant to this license, as well as a programme

for repair of the network. The system shall be presented to the Authority

for recording. The system shall include, without limitation, a proposal for

announcement. Publication of the system is to be done at the expense of

the Licensee.

3.3.10 Confidentiality of Consumer Information

The Licensee shall not disclose any information about any of its

consumers to any third party except to the extent that such information

is by Law required including but not limited to the following reasons:-

i. for the purposes of debt collection by the Licensee from the

consumer concerned;

ii. for statistical or research purpose provided the information is in

such a way that it does not link to a particular consumer;

iii. by the Licensee’s auditors for the purpose of auditing the

Licensee’s accounts;

iv. by the Licensee’s attorney(s) in connection with any potential,

threatened or actual litigation between the Licensee and the

consumer concerned;

v. by the Authority for the purpose of performing its functions under

the ICT Act;

vi. by an order of the court in respect of legal proceedings between

the consumer and another party pending in court.


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3.3.11 Service Quality and Obligations

i. The Licensee shall make the provision of its electronic

communications service available to the general public in

its service area without discrimination among subscribers or

among members of the general public who wish to subscribe

thereto.

ii. The Licensee shall enter into a service level agreement with all of

its network users and subscribers without discrimination. The terms

and conditions of the said service level agreement shall abide by

the minimum standards established in the Code of Conduct

published by the Authority.

iii. The Licensee shall ensure that it meets the minimum terms and

conditions of any service level agreement that it may enter into

with any network consumer.

3.3.12 Compliance with the Law

The Licensee shall comply with the provisions of the Information

and Communication Technologies Act No. 15 of 2009 (the “ICT Act”)

and other laws of the Republic of Zambia.

Question 4: What type of license should be issued to an MVNO? Should the

MVNO license be subjected to a competitive process? Do you think the MNO

should be held accountable for MVNOs poor quality of service? If not, please

explain.

Question 5: Do you think MVNO should be subjected to Universal Access

obligations? If not, explain your response.

Question 6: How could the sharing of spectrum be done between the MNO

and MVNO? Do you think MVNO should be issued separate numbering

resources by ZICTA or they should depend on numbers of MNO? Please

explain your response.


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CHAPTER 4

INTERNATIONAL EXPERIENCE

4.1 Kenya

4.1.1 In 2014, the Communication Regulator of Kenya licensed three mobile virtual

network operators namely Zioncell, Tangaza Pesa and Fincell ( a subsidiary of

Equity Bank). These MVNOs signed agreements with Airtel to use its network

infrastructure.

The MVNO license which has 15 years duration is categorized under the Non-

Infrastructure based Service Providers of the licensing structure.

In order to encourage entry, the Communications Authority of Kenya has set low

fees for an MVNO license at Kshs 100,000 ($1000 equivalent) and there is also a

levy of 0.4 % on the gross annual revenues or Kshs 80,000 ($800) whichever is

higher. The application processing fee is Kshs 5000 ($50).

4.2 Saudi Arabia

4.2.1 Virgin Mobile Middle East & Africa (VMMEA) has begun services in Saudi Arabia.

In a shake-up to the kingdom’s mobile market, the Communication and

Information Technology Commission of Saudi Arabia (CITC) has ordered each of

the country’s three mobile operators to host an MVNO to boost competition.

VMMEA has launched two brands in the market: Virgin Mobile targeted at the

youth segment, and Friendi Mobile aimed at expatriate workers. VMMEA is

partnering with Saudi Arabia’s STC, while Jawraa Lebara has teamed up with the

country’s second biggest operator Mobily. Similarly, Dubai retailer Axiom

Telecom entered into an agreement with Zain Saudi, but the license has since

been put up for a retender by the Saudi national regulator.

The whole process of setting up MVNOs in the Saudi market hasn’t gone without

some difficulties. VMMEA was first awarded the license by CITC in March, and at

the time the company said it was expecting to launch operations in Saudi Arabia

with the first half of 2014. There have, however, been some problems in

arranging interconnection with the other operators, and satisfying state security

concerns have also caused delay.

Saudi Arabia is only the second country in the gulf region to allow MVNOs, with

only Oman having launched such services earlier. VMMEA, which is partly owned

http://telecoms.com/resource-centre/view/zain/

http://www.virginmobilemea.com/Pages/MediaContentPage.aspx?MediaID=30


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by British Virgin Group, also has operations in Oman, Jordan, South Africa and

Malaysia. It is expected other countries in the region will follow Saudi Arabia’s

example, and start allowing MVNOs.

4.3 Brazil

4.3.1 In Brazil, MVNO regulation finally came into force in September 2010. Under the

new framework, Brazilian companies operating in sectors other than telecoms,

including retail, banking, media and sport industries, would be allowed to set up

MVNO operations.

The primary goal of MVNO regulation was to increase competition in the mobile

industry by allowing existing operators and new companies to target more

efficiently specific market segments or geographical regions. Anatel had chosen

to only allow companies headquartered in Brazil and with most of their shares

(or shares with voting rights) owned by Brazilian nationals or local corporations.

The regulator also chose not to intervene on the issue of pricing, leaving

operators and partners to negotiate their deals.

As the largest mobile market in Latin America and the sixth largest globally with

over 200 million subscriptions, Brazil would be an important benchmark for the

whole region. The regulation put in place was expected to facilitate the

formation and operations of the MVNOs.

Porto Seguro, the first company to launch a mobile virtual network operator

(MVNO) service in Brazil. Brazil’s industry regulator Anatel issued MVNO

authorisations in August 2011 to insurance group Porto Seguro and niche player

Datora Telecom, both of which are using TIM Brasil’s network infrastructure to

host a service. Porto Seguro paid BRL27, 000 (USD16, 900) for three permits to

provide services across the country. The operation was led by Safe Harbor

Telecommunications, a partnership between Porto Seguro and Chiacomm of

Brazil, the holding company that owns Datora Telecom. Datora also acts as a

mobile virtual network aggregator (MVNA) for the service. PrepaidMVNO notes

that Datora had 4,250 customers of its own at 31 May 2013, up from 1,000 in

February. Datora Mobile (Sermatel) launched its operation in November 2012 for

the machine-to-machine (M2M) segment.


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CHAPTER 5

CONCLUSION

5.1 It can be argued that Zambia has experienced stunted growth in the penetration

levels in the mobile cellular segment of the ICT sector in the past 2 years. This

would seem to suggest that regulatory intervention maybe required to re-

position the market so that there is accelerated innovation by the existing and

potentially new entrants.

5.1 The potential entrance into the mobile industry by an MVNO maybe one of the

regulatory interventions that would allow for increased competition on the

mobile cellular service side. The existing MNOs would take advantage of this

scenario to lease out their excess radio capacity and thus increase their customer

base.

5.2 In order for the Authority to allow for entry of MVNOs into the mobile industry

the licensing framework would have to be revised. The key issue is also allowing

for sharing of radio spectrum by the MNO and MVNOs as the current ICT Act does

not allow for lease of the radio spectrum.

5.3 Another key aspect would be to ensure that consumers of services provided by

the MVNOs are protected. The MVNOs would be expected to ensure that they

resolve any issues that their direct customers would encounter. Therefore the

MVNOs would have to enter into service level agreements with MNOs that take

this aspect into account.

5.4 It would also be cardinal for the MVNO to note that if the MNO license is

terminated by the Authority then it would also automatically cease to exist.

5.5 The issuance of the license to MVNO by the Authority would entirely depend on

whether there is a preliminary agreement with the MNO. The preliminary

agreement would be an assurance that the MVNO would commence operations

within 6 months of issuance of the license.

5.6 Experience worldwide has shown that regulatory support is a necessary

foundation for the MVNO but certainly does not ensure success. MVNOs success

stories show that MVNOs succeed only when MNOs understand the role that strong

brands can play in their business. Success most importantly depends on the right

business plan and partnership given the competitive dynamics in the

marketplace, and solid execution.


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ANNEX: CONSULTATION QUESTIONS

Question1: Do you agree with the definition of an MVNO given in 2.1.3? If not, what is

your proposed definition and provide reasons?

Question 2: Do you think it is necessary to introduce MVNOs into the Zambian

Telecom Market? If so, should a limit be set of how many are introduced? Please

provide adequate information for your answer.

Question 3: Do you think ZICTA should make the MNOs share their infrastructure with

MVNOs through enactment of legislation? What type of MVNO is would be most

appropriate for Zambia? What niches or areas do you think these MVNOs should serve?

Please elaborate your responses with appropriate reasoning.

Question 4: What type of license should be issued to an MVNO? Should the issuance

of MVNO license be subjected to a competitive process? Do you think the MNO should

be held accountable for MVNOs poor quality of service? If not, please explain.

Question 5: Do you think MVNO should be subjected to Universal Access obligations? If

not, explain your response.

Question 6: How could the sharing of spectrum be done between the MNO and MVNO?

Do you think MVNO should be issued separate numbering resources by ZICTA or they

should depend on numbers of MNO? Please elaborate your response.


24

REFERENCES

1. Information and Communications Technology Sector Annual Market Report -

2014; Markets, Competition and Licensing Department; ZICTA; February 2015

2. The Information and Communications Technologies Act No. 15 of 2009

3. Statutory Instrument No. 34: The Information and Communication Technologies

(Fees) Regulations

4. Service License terms and conditions of June 2010

5. http://ameinfo.com/technology/archive-technology/virgin-mobile-awarded-

mvno-license-saudi-arabia/ [downloaded 31/03/2015]

6. http://veridian.ro/aboutmvno/mvno-operational-models/?lang=en [

Downloaded 10/02/2015]

7. http://www.cgap.org/blog/kenya-ready-mvno [downloaded on 31/03/2015]

8. https://gsmaintelligence.com/research/2015/02/the-global-mvno-footprint-a-

changing-environment/490/ [ downloaded 4/03/2015]

http://ameinfo.com/technology/archive-technology/virgin-mobile-awarded-mvno-license-saudi-arabia/

http://ameinfo.com/technology/archive-technology/virgin-mobile-awarded-mvno-license-saudi-arabia/

Documents

LICENSING OF MVNOs IN ZAMBIA - ZICTA Paper - Licensing of MVNO.pdf · MVNO DEFINITION OFCOM An MVNO is an organization that offers mobile subscription and call services to customers