Cell C brings in the virtual army

2013-06-30 14:00

Cellular provider in talks to help new mobile networks launch in SA, reports Lloyd Gedye

SA’s mobile market is due for a massive shake-up as industry insiders confirm Cell C is in discussions with up to 15 companies who want to launch their own mobile virtual network operators (MVNOs).

That would mean a proliferation of new brands with their own network offerings competing with the networks that currently control the local mobile market.

An MVNO is a mobile player that doesn’t own its own network or spectrum, and rather rents access to an existing mobile player’s excess network capacity to offer services.

This can be in the form of a mere brand reseller, like Red Bull, which is already on the Cell C network; or a full MVNO, where the operator has its own number allocations, customer service centres and billing support systems, among others.

Although the MVNOs would be offering consumers access to the Cell C network, they can drive innovation by bundling, marketing and pricing products differently.

Virgin Mobile is a global pioneer of the model, though it hasn’t made much headway in South Africa.

According to industry insiders, Cell C is in the process of setting up a mobile virtual network enabler (MVNE) and is in negotiations with as many as 15 different players.

At the same time, French telecoms giant Orange has announced it wants an MVNO in SA, but insists the regulatory environment is too unfavourable.

Orange has a presence in 32 countries across the world and a subscriber base of more than 200?million, slightly more than MTN. Sébastien Crozier, the CEO of the group’s subsidiary, Orange Horizons, said from Paris that Orange was only interested in launching a full MVNO, and they were not interested in just being a brand reseller.

Asked about Cell C’s enabler platform, Crozier said even this did not allow Orange to be a full MVNO.

“Cell C has a very open approach to MVNOs,” he added. “But MVNEs don’t allow for everything a full MVNO would need.” Crozier said Orange had spoken to all four mobile network operators in SA about setting up its virtual network.

An industry insider who is familiar with the state of some of the current negotiations, said that Vodacom and MTN were a lot less interested in welcoming MVNOs on to their network than Cell C.

Vodacom and MTN did not respond to queries.

Cell C spokesperson Vinnie Santu confirmed the company is in talks with various potential MVNOs and these talks are all confidential.

Crozier said Orange had met with the Independent Communications Authority of SA (Icasa) to inform the regulator of its intentions and argue for greater regulation of the MVNO space.

“We told Icasa we will not enter until the regulations serve our interests,” said Crozier. “We’re not in a hurry. We want to come in to South Africa as a full MVNO and innovate and offer customers new services.”

According to him, regulations need to establish the rules for competition.

The crux of the matter, according to the insider, is that Icasa would not only have to force mobile operators to allow MVNOs, but ensure that they have access to networks at wholesale prices. This had happened in many international mobile markets, where regulators have opened the field to MVNOs to boost competition. In other markets, established players have seen the value of opening up their network to MVNOs voluntarily.

Icasa spokesperson Paseka Maleka said it encourages any party to participate in providing electronic-communications services, subject to the holding of the requisite licences. “Orange wants regulated access to South African operators’ network infrastructure, something Icasa has not yet considered.

As and when the need and resources are identified, the authority will consider future regulatory interventions with the goal of enhancing social welfare,” he said.

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