Partial liberalisation of the local telecommunications market is an opportunity for virtual operators to compete, says Gartner principal research analyst Will Hahn.
Speaking at Gartner ITxpo/Symposium Africa 2009, in Cape Town, this week, Hahn said the Altech judgement and the consequences of the Electronic Communications Act have spawned around 600 possible competitors in the telecoms market.
While they all have the right to self-provide, few will have the means to roll out infrastructure or buy into spectrum, leaving the possibility of niche virtual operators as an attractive alternative, he noted.
SA is already being serviced by a number of virtual telecoms providers, the most well known being Virgin Mobile, which piggybacks off other mobile carrier networks. Hahn explained there is room for even more targeted solutions in SA.
Other examples are First National Bank's recent launch of its Internet and VOIP offering, and MWeb, which this morning released its mobile data segment.
He said virtual telecoms providers serving a particular niche in the US are gaining market share. Operators servicing groups as small as a church community, essentially a phone-based social network, are gaining ground with western users.
According to Hahn, virtual operators in Europe have had varying levels of success, in markets that are strikingly similar. He pointed out that there is no definitive reason why some virtual offerings are successful while others are not.
“In Germany, there is a larger share of VNOs [virtual network operators], but Sweden has almost none. Italy is showing fast growth, while the UK is on the decline. Virtual operators don't always succeed. But that is not a sign of a failure for the market model.”
While Hahn admitted the South African telecoms market has defied all benchmarks for emerging and transitional markets, he said there is no reason why SA couldn't reap the success of several targeted virtual operators.
He explained there are various characteristics to a successful virtual operator, which includes attractive price points, targeting an ethnic group, usage in the retail sector, or a definitive product.
However, Hahn added there are still several regulatory hurdles that need to be addressed to allow the market to thrive. He pointed primarily to the high interconnect rates currently charged by the mobile networks.
Hahn is hopeful the regulatory barriers will soon be dropped. “Virtual operators are good for you. You should be rooting for them.”
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