The international telecoms sector is moving into a new world where thinking and revenue sources are different, says Ewan Sutherland, executive director of the International Telecommunications Users Group (INTUG).
Sutherland was in SA last week to visit the Communications Users Association of SA (CUASA), which is a member of INTUG.
He says broadband continues to evolve as technologies and business models change, and South African network operators therefore need to adapt and rethink the way they operate.
In an interview with ITWeb, Sutherland suggested the introduction of virtual network operators (VNOs) as a viable catalyst to encourage competition. He says allowing VNOs to repackage services from established operators and reselling them to niche markets would introduce competition at community level and within certain niche groups without requiring onerous regulatory measures.
The niche grouping could be based on language or lifestyle interests, and established brands would also have the opportunity to repackage services to resell to their customer base, he says. Sutherland says in order for this model to work, mobile operators need to first acknowledge that they cannot serve everyone.
Boosting competition
Sutherland feels most of the telecoms stakeholders would benefit from such a venture.
More players in the market would introduce competition, which would lead to lower prices and increased quality, and users would have greater access to services. Operators would not lose out either, as they would gain increased revenue from the wholesale purchase of services by VNOs.
The model would also boost the local economy, help bridge the digital divide and provide increased opportunities for local entrepreneurs. It would also encourage innovation in business and the development of business models.
"There would be no need for rigorous regulation either, as a commercial agreement would exist between the VNO and the network operators."
According to Sutherland, the model worked particularly well in India, where the introduction of VNOs presented enough competition at local level to prompt national operators to be more innovative in their pricing and packaging of services.
As a result, there was increased take up of telecoms services among the population, doubling the subscriber base within an 18-month period. He also notes that the take up was highest in the rural areas, where operators had limited reach before the introduction of VNOs.
Network operator`s view
Vodacom accepts the existence of mobile VNOs as long as fair competition and commercially negotiated agreements between existing operators and virtual operators govern that relationship, says Mthobi Tyamzashe, Vodacom`s executive director for corporate affairs.
Tyamzashe says roaming agreements would enable underserviced area licence holders to focus on quickly building a customer base and brand. This would create positive cash flows, which could be used to fund the infrastructure roll-out imposed by their licences. A similar arrangement was agreed when Cell C was awarded its mobile cellular service licence.
Sutherland delivered a keynote address at the CUASA annual general meeting on Thursday and a free seminar on broadband trends and issues at the Link Centre at the University of the Witwatersrand on Friday.
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