Recently, the Minister for Communications and Digital Economy, Dr Isa Ali Pantami, directed telecommunication companies (otherwise known as telcos) to reduce the price of data plans, improve the quality of service and check illegal deductions of data.
I think the Minister’s action is very commendable but I would have thought it best to allow market forces, through the introduction of new competitive players like MVNOs to assist in achieving the first objective of reducing the price of data plans in Nigeria
Currently, Nigeria has 4 Mobile Network Operators (MNOs) responsible for the provision of communication services. Presently, there is no Mobile Virtual Network Operator (MVNO) existing or operating within the country.
MVNOs differ from MNOs, in the sense that, they do not need a license for spectrum to operate. They either do not need to acquire communication networks or assets. MVNOs purchase communication services (voice or data) from MNOs and then resell to consumers. They could hire customer support, marketing etc. and even operate with their sim. You can think of MNOs as manufacturers, while MVNOs act as wholesalers (middlemen) – simply reselling communication services to consumers.
In most parts of the world, where MVNOs operate, they tend to offer cheaper communication services to consumers, perhaps because their investment in communication networks is light. They also offer consumers the flexibility to choose from different operators.
Using the UK as a case study, Lyca mobile or Lebara, is well known for its cheaper communication services to consumers with lower purchasing power, even though the quality of service may be poor in certain regions. Also, the introduction of Lyca Mobile also means that MNOs like O2 are forced to reduce their services in a bid to attract more customers to their networks and reducing the churn rate.
Additionally, with the advent of 5G, network slicing would allow MNOs to be able to sell slices (dedicated parts of their networks) to enterprises or MVNOs, based on quality of experience, latency, reliability, speed, etc. This means that the Nigeria communication market ought to start preparing for this transition, where MNOs, in the future, could serve simply as manufacturers of communication services while other players market the services directly to consumers. This could equally benefit the MNOs who may be able to reap a quick return on their investments, through a direct focus on manufacturing only.
I therefore would like to conclude that we could achieve lower communication services within the country by incentivising new players (within the industry) to consider acting as MVNOs, which would lead to a fair competition within the market and no doubt, lead to the reduction of communication services offered to consumers.