Fourth Mobile Operator? We already have that

Zambia now has a fourth mobile operator. Contentious? Let me make my case for stating the obvious. Zambia has 3 licensed mobile cellular operators as defined by ZICTA; Airtel, MTN and Zamtel.

The devil is in the phrase ‘mobile cellular’.  Mobility we understand as not being tethered or fixed to a specific place to use the service. Cellular, is a term borrowed from biology and is loosely defined in the digital world. The definition is:

denoting or relating to a mobile telephone system that uses a number of short-range radio stations to cover the area that it serves, the signal being automatically switched from one station to another as the user travels about.

The table below has the full list of Individual Network Licenses issued by ZICTA. The Mobile Cellular license class is highlighted and includes the requirement for numbers.

According to the regulations, numbering is issued by ZICTA; for a mobile operator to operate they must have a number within the 09xx-xxx-xxx range. The usefulness of that numbering has declined rapidly in the last 5 years with the rise of Over The Top (OTT) calling apps. The first big break into the mobile calling space was Viber and once WhatsApp and Apple Facetime followed suite, the fate of traditional GSM calls was sealed. In the middle of digital definition of cellular, we have the phrase mobile telephone system, a phrase more akin to what Alexander Graham Bell invented than hunting Pokémon and mobile banking. Let’s change that to modern computing system, will help me sleep better if nothing else 🙂

I concede that smartphone penetration is not at the levels it needs to be in Zambia and this does help with pushing the need for regulator driven number assignment. According to the ZICTA report of 2015, Zambia has:

• 10.8 million mobile subscribers
• 69.7% mobile phone penetration
• 4.3 million mobile internet subscribers
• 98% of internet subscriber are mobile
• 15.3% internet penetration

With 6.5 million people owning a feature phone they form the majority of subscribers on the mobile networks. The feature phone users only make use of the network through an assigned number from their provider. However, 4.3 million subscribers make use of the networks with internet enabled devices. These users contribute more to the operator’s bottom line and tend to rely on identities, not numbers. Identities here include any cloud-based service where you exist as a unique user. Without grasping at statistical guesstimates and relying on generalities, most of the 4.3million would move to a cheaper data only network than maintain their mobile providers number. The users can reach out to their networks and associates of choice using social media or the web in general.

In the past, a big fuss was made about the potential entrance of the 4th mobile operator. The fuss largely was driven by the old policy definition, government posturing and a lack of understanding of what the user needs. That time has passed. We now eagerly wait for the 5th, 6th and 7th entrant into the market to drive competition, innovation and growth in a segment that has grown too big for its own good. When I state too big for its own good, I mean government policy jealously guards it. No other sector limits the number of entrants or puts up massively license costs, with the possible exclusion of utilities. If there is a commercial opportunity, go for it!

People will raise the question if the market can support more than 3 operators? That question implies a few factors:

1. The operators have a massive CapEX investment in the ground
2. The market is stagnant or shrinking not growing
3. They require huge turnover to be operational

My argument is all of the above points we valid in the 2000s.

Looking at the CapEX investment. The Mobile Network Operators (MNOs) have sold the majority of their towers to IHS, all a new entrant now needs is transmission equipment and backend IT systems. The complexity of supporting the passive (tower) infrastructure and management processes including negotiating rentals and construction now belongs to someone else. The IT systems within the MNOs are now fully outsourced to a vendor like Huawei, ZTE or Ericsson. In other words, all you really need is a marketing budget and a shop 🙂

The market size opportunity is too small. With less than 20% internet penetration, 80% of the market is untapped. That market void in any normal sector represents a huge opportunity that would drive a full-scale gold rush to mine it.

The size of the turnover. The huge turnovers needed to keep large networks are required because of the closed nature of mobile networks. The networks prefer you to be on-net that means they have to provide a ubiquitous network to keep you within their walled garden. If the networks were truly open, think the internet. Then it would not matter what network you are on, my WhatsApp call to you will always work, always cost the same price and you are always on-net!

Policy makers would claim bloggers tend to criticise and not offer solutions so here is my 6 point policy wishlist (it is the season):

1. A mobile operator must rate all traffic equally (voice, data and especially OTT)
2. A mobile operator must have 80% smartphone penetration within 5 years of being awarded their license or it will be revoked
3. A mobile operator must provide coverage to 80% of the geographic area of the country within 5 years or their license will be revoked
4. The regulator tax will not exceed 1%
5. To qualify as a broadband network a provider must meet the FCC 2010 guidelines for speed of 4Mbps download and 1Mbps upload for 50% of its subscribers
6. Traffic prioritisation will only be permitted in the event of a network outage or for essential services

Our regulatory environment needs to drive our future and not anchor us to the past. Create laws that force companies to hire more engineers and innovate, not laws to create unwieldy behemoths with armies of lawyers. In simple terms the do part of the regulator’s handbook should be larger than the don’t.

The fourth operator is old news. It is dressed in red.