A move this past June by the Nigerian Communications Commission to open up licensing for independent Mobile Virtual Network Operators (MVNOs) has the potential to spark a rush of digital innovation, industry observers have said.
And as this “great Nigerian MVNO race” becomes a one-of-a-kind laboratory for creating innovative mobile communications products and infrastructure models, businesses around the world are watching closely to learn what the market will adopt, and where they should be investing their development budgets in the years to come.
While MVNOs have been a big part of the international telecommunications industry for decades – the first MVNO model was launched by Virgin Mobile UK in 1999. According to observers, the new licensing framework in Nigeria is creating a unique competitive environment, one that will help industry analysts better assess what business and marketing approaches will be the most effective in the modern age of mobile communications, Internet of Things and Artificial Intelligence.
Up to this point, most MVNOs – which lease access to network infrastructure from a traditional Mobile Network Operator (MNO) – typically large, incumbent businesses such as MTN or Airtel), rather than building that infrastructure themselves – have largely operated as a subsidiary of an incumbent MNO or as part of a franchise.
That had made it nearly impossible for analysts to assess the relative success of their business and technology models, as their operating environments are typically indistinct.
Now, this Nigerian-made “experiment” stands to shake things up. Not only is the local industry seeing the rapid launch of dozens of new, independent MVNOs – the licensing framework – which comprises five tiers, would ultimately see many of these MVNOs in direct competition with each other.
That would offer industry analysts across the globe an opportunity to understudy which specific aspects of the sales models and operational approaches adopted by these start-ups will lead to success – or failure.
“Because the business conditions will be the same, it will be easier to see the effect of different variables,” says Andriy Zhylenko, CEO of PortaOne, a software company that provides adaptable billing and operations platforms for communications, mobile and Internet of Things service providers, many of them MVNOs.
Zhylenko further points out: “It’s similar to a plant scientist suddenly being able to study the effect of different fertilizers on two seedlings that share the same DNA, rather than on two different kinds of plants.”
Paradigm shift to empower smaller, agile operators
Zhylenko noted that this Nigerian experiment could also help drive the development of the next wave of communications technologies, helping to define the future of the industry in the rest of Africa and potentially across all emerging economies.
“It’s a unique opportunity to see how different technologies will play out in terms of providing access to more advanced and more affordable communications services,” he says.
MVNOs, he added tend to be early adopters of new, more adaptable
and affordable technologies that need less hardware, and often even less coding expertise.
This includes cloud computing, software-as-a-service (SaaS), artificial intelligence, and Application Programming Interface (API), which allows different software applications to communicate with each other – all tools that these companies can use to test new ideas in the market at a lower cost, and with less risk.
“There has long been a traditional telecom way of doing business, where you buy closed ‘black box’ technology from a major vendor, and that technology tells you how you can run your business,” Zhylenko explained.
He continued: “But the MVNOs that are launching under the new Nigerian licensing framework are part of a new breed of company that is looking for operational approaches that are as independent and flexible as they are.
” And as more of these companies enter the market, that will drive a lot of innovation, not just in voice and messaging packages for mobile phone users, but also in e-commerce, digital loyalty programs, even Electric Vehicle charging stations – basically, any kind of electronic service. ”
New local operators, new ways of doing business
And it’s not just mobile services providers that are excited about the country’s newly opened communications market – as the new crop of MVNOs serve Nigerians, other businesses are serving those MVNOs.
According to Satya Mekala, Managing Director at Brussels-based Wireless Technology Labs (WTL), which has been providing telecommunications equipment and consultancy services in Nigeria for more than a decade “Access to affordable, reliable infrastructure has been a challenge for both businesses and consumers in the African market.”
In Mekala’s view, the new licensing framework is a huge opportunity to deliver better connectivity platforms and hardware solutions that are designed for remote regions.
“The rural telecom licenses that the NCC has given MVNOs from tier 3 and above will drive investments to connect more of the country,” he says.
“This will certainly be beneficial to the Mobile Network Operators, Mobile Virtual Network Operators and also to these local communities.”
Differentiation will be key to MVNO success
While Nigeria may be ahead of the game, the MVNO market is on the rise across the globe: speaking at a telecom sustainability conference in Lagos last December, Mekala noted that the sub-sector is expected to reach US$123 billion by 2028 – more than twice the estimated market size in 2020.
PortaOne’s Zhylenko has also been watching a burgeoning demand for advice and support for MVNO development – in fact, a free “start-up checklist” for new MVNOs that the software company released last year saw more than a thousand downloads within the first 10 months.
In Mekala’s view, the MVNOs that succeed in this race are the ones that can understand and connect with a niche. “Customer acquisition is a costly business,” he says. “You also need a clear vision of what specific market you are going to be addressing: what their needs are, what service packages will meet those needs, and what the right price is for those packages.”
More business trends to watch for in the Nigerian “MVNO race”
As a telecom-industry veteran with over two decades experience, Zhylenko has a few predictions of his own on which of these new MVNOs will dominate in the Nigerian market – and so define the direction of the global industry over the next few years.
“New technologies such as e-SIM are drastically simplifying the logistics of bringing on new mobile customers – not just in the retail market, but even for enterprises they look for ways to manage things like work-from-home call centers and distributed teams,” he said.
“The companies that embrace the technologies that can make life easier for their business and retail customers will win, especially as those customers spread the word on social media,” he emphasized.
Same goes for technologies that make life easier for the MVNOs themselves, he adds: “Things like AI for business analytics and back-end processing, automated customer self-service, and flexible operational platforms that allow MVNOs to adapt to new product innovations and get them to market quickly – these advances can all give a telco a significant edge in the market.”
Zhylenko also sees MVNO businesses looking for more ways to integrate themselves into the daily lives of their customers as a way to give them more reasons to stay – or at least to make it more difficult to leave.
“It’s very easy to swap your current SIM card for a new one if you see a cheaper rate, but it’s a lot less easy if that would lose you access to a bunch of free streaming services, or to a micro-loans service, or if you have integrated their ‘Internet of Things’ connectivity into your home,” he concluded.