INTRODUCTION
The telecommunication industry is rapidly reaching a new level of advancement due to the world’s evolving technology. We now have a variety of advanced solutions to keep our devices connected to the internet which Mobile Virtual Network Operator (MVNO) is one of them.
A Mobile Virtual Network Operator (MVNO) is a telecommunications product and service operator that rides on top of the capacity of a fully Licenced Telecommunications Service provider or Mobile Network Operator (MNO).
The MVNO reaches a “Wholesale Agreement” or “Revenue Sharing Agreement” with the Telecommunications Company (Telco) through negotiations and delivers its services after bulk purchasing resources from the Telco. MVNO facilitate mobile connectivity for their subscribers by purchasing bulk access to network services from MNO.
The major difference between an MVNO and an MNO is the simple fact that an MVNO has no ownership whatsoever of spectrum elements or a Radio Access Network (RAN) and does not manage any core network infrastructure, irrespective of its operational model while MNO can completely own whatsoever of spectrum elements or a Radio Access Network (RAN) and manage their own core network infrastructure.
UNDERSTANDING THE MVNO BUSINESS MODEL
An MVNO operates by focusing on branding, customer service, marketing, pricing plans, and often specific niche markets, while relying on the technical backbone of an established MNO.
There are different levels or tiers and types of MVNOs depending on how much infrastructure and operational control the MVNO retains, but all rely on MNOs for actual network services.
The different tiers and types of MVNOs are as follows:
The Five Tiers of MVNOs
Tier 1- Services Virtual Operators
Tier 2- Simple Facilities Virtual Operators
Tier 3- Core Facilities Virtual Operators
Tier 4- Virtual Aggregator/Enablers
Tier 5- Unified Virtual Operator
- Tier 1- Services Virtual Operators
A V.O within this tier leverages on its ability to offer services to its customers without owning any switching or intelligent network infrastructure. They do not control any numbering resources.
Responsibilities lie with the host Licensee to provide wholesale capacity to the V.O for delivery of its products and services.
They can run their own SMSC, distribute and own their own content, as well as offer basic network services such as voicemail to their customers.
The Operator is free to operate in at least one of the following areas:
- Own Brand
- Own Sales and Distribution channels
- Device and Phone sales and management
- Limited tariff control
- Customer Relation Platform
- Own Content/Applications
- Host and distribute VAS
- Can run SMSC for SMS
Tier 2- Simple Facilities Virtual Operators
A VO within this tier assumes more control of the value chain which allows it to significantly differentiate itself from its host. The VO does not have Core Switching and Interconnect capabilities but can set up its own Intelligent network (IN) to provide their own IN services to the customer.
It can own more of the customer segment than Tier-1 operators with the capacity of establishing its own Home Subscriber Register or Authentication centre, Equipment Identity Register, and Home Location Register, if it desires to.
They rely on the number ranges of their host MNOs although they have access to short codes or premium numbers for customer care and must adhere to the guidelines set forth by the Commission.
Its capacity to control its own tariff structure and packages to a high degree allows it to generate its own revenue through traffic from its own customers but relies on a shared revenue structure with the host for inbound calls.
The VO can manage areas from Tier – 1 in addition to at least one of the following areas:
- Owns and issues its SIM
- Owns and operates its own Intelligent network
- Owns and Operates EIR/HLR/AUC/HSS
Tier 3- Core Facilities Virtual Operators
Within this tier, an operator relies on its technical and commercial prowess to launch and operate a full core network with switching and interconnect capabilities.
The VO relies totally on its host to provide Radio Access capacity at wholesale to deliver its products and services to its customers.
The VO can engage in interconnect agreements with other network providers. Revenue generation stems from both outbound and inbound calls which gives it full control over its tariff structure.
VOs within this tier are earnestly urged to target underserved and unserved areas with subsidised requirements to operate in those areas, being taken under consideration by the Commission.
The VO can manage areas from Tier – 2 in addition to at least one of the following areas:
- Owns and manages core network elements (switching and interconnections including:
- IP Multimedia Subsystem
- MSC and GSMC
- PGSN/PGW
- SGSN/SGW
- MME
- Tier 4- Virtual Aggregator/Enablers
The operator within this tier is responsible for aggregating and/or Enabling VO services within the market. It relies on a model in which it stands as a middleman between the MNO and multiple Vos.
The aggregator is responsible for purchasing bulk capacity from a licensed network operator, and reselling it to multiple Vos, therefore streamlining the process of negotiating capacity agreements with said network operators.
The aggregator is permitted to choose what level of the value chain it desires to aggregate. This means that an aggregator can rely on its host for switching and interconnect purposes but control its intelligent networks and content delivery platforms, therefore only capable of aggregating Vos from tier – 2. It is usually not common to see aggregation of tier – 3 Vos, but it is technically possible.
Enablers on the other hand provide a platform which Vos can “outsource” the heavy lifting of B/OSS (Business/Operations Support Systems) processes to, while they focus on the sales, marketing, and distribution aspect of the value the Vos are creating.
In pursuant of the objective to improve national coverage, these operators are permitted to directly engage customers within an underserved and unserved region through a “Shared Rural Coverage Agreement” with a licensed spectrum owner. Within congested and urban markets, they can only perform the role of aggregation and enabling of MVNOs.
The Aggregator/Enabler is permitted to:
- Install capacity to serve its aggregation/enabling platform as it deems fit.
- Perform the role of a Core Facilities Virtual Operator (Tier – 3) where the region being served is underserved or unserved.
- Tier 5- Unified Virtual Operator
In the simplest terms, a VO within this tier can decide the level of service it desires to offer ranging from tier – 1 to tier – 4. This gives the VO freedom of choice to deploy its services the way it deems fit if it still has a valid license.
They can engage in “Shared Rural Coverage Agreement” within underserved and unserved regions.
Types of MVNOs
There are five Different types of Mobile Brands/MVNOs, the type determines roughly the features, and flexibility you will get which are as follows:
- Branded Resellers (skinny MVNOs)
- Thin MVNO
- Light MVNO
- Thick MVNO
- Full MVNO
- Branded Resellers (skinny MVNOs)
Branded Resellers are MVNOs that leverage predefined settings, tariffs, and bundles from existing service providers (MNOs and/or MVNEs or even other MVNOs) and sell them under their own brands.
- Thin MVNO
Thin MVNOs (Service Providers) delegate operational management of core network services to host operators (MNOs and/or MVNEs or even other MVNOs). Thin MVNOs acquire a lot from the host network such Core Network, Radio Access, and most of the time the management of applications, billing and Rating. Typically, there is NO license needed for a Thin MVNO.
- Light MVNO
Light MVNOs acquire Core Network and Radio Access from host networks, they keep everything else in-house. The Light MVNO has its own Business Support System (BSS) and its own Operational Support System (OSS). Which include the management of applications and services, rating and billing, customer care, and sales and marketing.
- Thick MVNO
The thick MVNO is basically an expansion of the Light MVNO setup. The thick MVNO will have some Core Network elements of their own which will broaden the flexibility and give the MVNO some additional options. For the radio access, they negotiate service agreements (also known as wholesale agreements) with MNOs, MVNAs.
- Full MVNO
A Full MVNO, you will typically have complete control over everything except radio access, which remains in the purview of MNOs. Full MVNOs are also sometimes referred to as “premium MVNOs” because they offer the most flexibility and control.
- NCC’S MVNO LICENSING FRAMEWORK
Under Section 31 (1) of the Nigerian Communications Act, 2003, no person or company is allowed to operate a telecommunications system or provide communications services in Nigeria without a proper license or exemption from the Nigerian Communications Commission (NCC).
Failure to comply with this law, as outlined in Section 31 (2), can result in serious penalties including:
- A fine not less than the initial fee for the required license.
- A fine not exceeding ten times the initial license fee for the relevant licence.
- Imprisonment for up to one year.
- Or both fine and imprisonment.
Additionally, if convicted, all properties, facilities, installation and equipment used for providing the unlicensed service will be forfeited to the NCC.
Key Facts About the MVNO License:
The following are the key facts about the MVNO licence as provided by the Licence Framework for the establishment of MVNO in Nigeria;
- Validity: The MVNO license is valid for 10 years, with the option to renew for another 10 years.
- Renewal Process: The licensee must apply for renewal at least 12 months before the license expires.
- Renewal conditions which are to be met at least 6 months before expiration include:
- Payment of renewal fees and other financial obligations.
- Submission of a valid Host Network Operator (HNO) – MVNO agreement.
- Meeting any other criteria set by the NCC.
Note: The NCC also has the right to review the MVNO’s performance before granting renewal.
- KEY NCC LICENSING REQUIREMENTS FOR MVNOS
To apply for an MVNO license in Nigeria, there are general eligibility criteria as set out in the Licensing Regulation Document, 2019. These criteria help guide applicants through the process:
General Requirements:
- Licensee/Applicant must be a corporate body dully registered with the corporate Affairs Commission with proof of same submitted to the Commission during application.
- Licensee/Applicant is to file with the Commission, the full contract agreement with at least a Host Network Operator or a National Carrier.
- Licensee/Applicant is obliged to show proof of financial capabilities to cover its Capital Expenditure (CAPEX) and Operational Expenditure (OPEX) for the implementation of its strategic operations.
- Licensee/Applicant must meet the technical requirements of the Commission for operating within the tier of choice.
- Where applicable, Licensee/Applicant should have secured reservation or assignment of resources required to operate specifically Numbering resources
- Licensee/Applicant must be aware of the necessity to obtain other licences in provisioning its full services and outline them when submitting application
- Licensee/Applicant shall provide necessary information to the Commission as specified under Schedule 1 of the Licensing Regulation document, 2019
- In line with Executive Order regarding contracts and services, Licensee should show prove of local content in its ownership and service delivery.
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