Friday, August 29, 2008

MVNOs - Turkey and South Africa

Muddy Water Around the MVNOs in Turkey and South Africa

A recent report from Reuters indicates that Turkey's telecommunications regulator is considering regulations to allow mobile virtual network operators (MVNOs) to gain licenses to operate within the country by this winter. This feature of the more developed markets is now appearing in certain larger emerging markets as well, and it's interesting to note the differences. Turkey, which is perhaps a half-step behind South Africa in general terms of liberalization and advancement, is also behind in this regard, because there have been MVNOs functioning in South Africa for almost two years.

The difference is that the South African regulators have never said anything to clarify this fact, and actually forbade virtual operators as recently as four years ago. What's happened since then? I would say this is one of a number of issues where the regulator (or actually regulators, as there are several bodies with a say in telecom) has gradually fallen silent, enervated by infighting and uncertainty over the future direction of the regime. The Electronic Communications Act of recent times, in truth, does allow for licenses that can be interpreted to mean facilities-free competition. But there is quite a bit of confusion over this, as in several other areas, including self-provisioning, access to international bandwidth (regulation of submarine cable landing sites) and the ever-popular fixed-wireless technologies.

Ideally, one should handle things the way the Turkish authorities appear to be. The regulator makes a clear statement, and then the licenses come in. South Africa's "muddy waters" around regulation have competitors trying things and hoping for the best. With the World Cup 2010 on the way, I presume authorities will have the wisdom not to stand in the way of a company that is getting things done. But South Africa's heritage is facilities-based, and so I'm guessing the goodwill won't extend beyond the players that are putting in fiber, or launching new satellites, or bringing in the submarine cables. Virtual operators occupy an interesting niche, but right now, they compete in South Africa under uncertain conditions.

I call upon the South African regulators to meet behind closed doors, hammer out a consensus and then issue it for all to see. It could be that on many issues - self-provisioning of competitive players, fixed-wireless licenses, essential facilities and open access - they'd simply be repeating themselves, and possibly on others they won't be able to agree yet (in which case they should say that, and state the governing principles for review and arbitration). But the market is at a crucial point, and now's the time to establish as much clarity as possible for all concerned. I wish them well, and we'll continue to keep an eye on this emerging model telecom market.

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