Four new telecom license categories soon

The Minister of Communications Dr. Edward Omane Boamah has hinted that the telecom industry regulator, National Communication Authority (NCA) has created four new license categories for the industry but stopped short of saying when those licenses would be up for grabs.

The license categories are MVNO (Mobile Virtual Network Operator) Licenses, Universal Access Licenses, Interconnect Clearinghouse Licenses and International Wholesale Traffic Licenses.

There is yet to be public consultation on these license categories, so it is not clear when they would be issued. But when they are ready, they would each be open for competitive bidding. Official communication on these licenses are likely to come out next week.

The other questions have to do with how many licenses would be issued under each category, what the obligations of the existing telcos would be in the face of those licenses, and whether the legal/policy framework exists for these licenses.

But it is appropriate to speculate about what these licenses might seek to bring into Ghana’s telecom industry based on what similar licensees elsewhere have done, and what the possible merits and demerits could be.

Some MVNOs in the UK
Ghana’s telecom industry regulator announced about a year ago that it was going to start issuing MVNO licenses, and some Ghanaian companies actually submitted requests, but the regulator suspended the move and did not give indication when it was going to come back with it until now that the Minister has mentioned it again.

MVNO, otherwise known as mobile other licensed operator (MOLO) is simply a wireless communications service provider that sits on the network infrastructure of an already existing network and run a service for different customers under a different brand name.

The MVNO therefore, does not own the wireless network infrastruction over which it provides service to its customers. It enters into a business agreement with the original mobile network operator (MNO) to obtain bulk access to network services at wholesale rates, then sets retail prices independently.

In the UK for instance, there are loads of MVNOs. EE (T-Mobile) alone has 31 MNVOs sitting on its network; popular among them is Virgin Mobile. Vodafone UK has seven MVNOs, the most popular one being Lebara. O2 has four out of which Lyca Mobile is the most popular and 3 (Three) has three MVNOs.

An MVNO may use its own customer service, billing support systems, marketing and sales personnel or it may employ the services of a mobile virtual network enabler (MVNE).

So in Ghana’s circumstance, there are currently six MNOs namely MTN, Vodafone, Tigo, Airtel, Glo and Expresso. Anyone seeking to run an MVNO could approach any of these six and enter into a business agreement to obtain bulk access to network service at wholesale prices and start a network under a different brand name, issue its own SIM cards and have its own customers. Indeed Tigo Ghana once hosted an MVNO called Alltel, owned by Kofi Kludjeson of Celltel/Kasapa fame.

The MVNO would normally pay the MNO for the service support, as per the terms of their contract. The agreement may also cover who would be held responsible in case of any network challenges that affects the customers of the MVNO, since they do not own or manage the network infrastructure.

There are scores of MVNOs across the world, but they usually focus on providing service within particular areas rather than nationwide. They also usually offer very affordable packages, as with the MVNOs in the UK for instance.

Whereas MVNOs in themselves are not a bad idea, there are various issues that have to do with actual implementation of an MVNO policy, which could be a challenge, if such licenses are not issued with caution.

For instance, an MVNO would have to sit on an existing operator’s network. The first question in whether the existing telcos would be obliged to welcome any MVNO which applies to them for infrastructural support – how many MVNOs can sit on an MNO – would the MNOs be obliged to serve MVNOs with the entire spectrum of their infrastructure like switches, cell sites and others?

These and many other implementation issues should be clarified by regulations before any such policy takes off, otherwise there are bound to be problems.

Secondly, there are six telcos in Ghana and they are already complaining about dwindling revenues, while consumers also complain of poor quality of services. So the question is whether the way to go is to pile on more telcos, this time not on completely new networks, but on the very infrastructure of the existing MNOs, which they are still struggling to optimize, and consumers are still waiting to get the best of service from?

Interconnect Clearinghouse
An interconnect clearinghouse is basically a central platform (network) that reconciles all telecom traffic, calls and data, sent across networks and apps locally and sent from overseas into a country. In effect, it is the meeting point or a one stop shop for telcos, value added service (VAS) and content providers (CPs), as well as app developers. So the VAS/Content providers and App Developers who are often shortchanged and sometimes bullied by telcos when they go dealing directly with them, could get easy access to all telcos and also get better deals with each telco through the intervention of the clearinghouse.

In Ghana, for instance, the VAS providers/CPs stand between App developers and telcos. The VAS/CPs take apps and content from developers and sell to the customers of the telcos and then pay the telcos and the app developers. In that arrangement, the telcos take up to 70% of the revenue generated and only 30% is left for the VAS/CP and the App developer and or copyright owners to share. In other jurisdictions the VAS/CPs and App Developers get the lion’s share of the revenue, but not in Ghana. A clearinghouse may therefore correct this anomaly and service the young VAS/CPs and App developers better.

But the other interesting part of the work of a clearinghouse is that, by default, it gets to monitor domestic traffic and incoming overseas traffic (calls and data) real time. That may not be the core function in Ghana’s case but it is a big possibility.

It is important to note that the interconnect clearinghouse is essentially an additional telecom network that receives traffic from one network/service provider and routes it to the intended final recipient on another network. One exists in nearby Nigeria. It is called Interconnect Clearinghouse Nigeria. The Nigerian example is not particular a great one in practice. But Ghana is known for doing better where others have failed. An example is MNP (Mobile Number Portability).

Clearinghouse in not a bad idea, but telcos for instance have interconnect agreement where they reconcile their call detail records and sort things out by themselves. If the work of a clearinghouse would have to include that, what would then become of the interconnect agreement?

Secondly, the monitoring of calls by the clearinghouse could be looked at as governments subtle way of trying to introduce the real time monitoring system, which the government, through the NCA and the Ghana Revenue Authority has always sought to do but has been fraught with implementation challenges and alleged corruption.

Currently, the telcos have been obliged to allow Subah Infosolutions Limited to do real time monitoring of all domestic calls, on-net and off-net. The NCA had tried without success to monitor inbound international traffic, but it is still working on getting it going. These are, in themselves, good policies to ensure the state got the revenue due it from the telcos. So a clearinghouse seem to be just another move by government to peep into the revenue flow of the telcos.

The other challenge though, is that calls or SMSs from one network to the other would no longer go from the originator network to the recipient network directly. It would go through a middle man, the clearinghouse, before being terminated. That could possibly lead to delays and quality of service issues. The question then would be who the customer could hold responsible in case of any of these challenges; the original service provider, the clearinghouse or the recipient network?

The clearing should probably be held to the same quality of service (QoS) standards as the telcos, so that if it fails to deliver, it could be fined or sanctioned in whatever form is suitable. Ghana’s NCA can be trust to do just that.

Universal Access
All the existing telcos have mobile cellular licenses, international gateway licenses (except Expresso), and ISP (Internet Service Providers) licenses. But fixed line licenses are limited to two providers, Vodafone and Airtel till date.

A Universal Access license would therefore allow all the other MNOs to also do fixed line service.

Industry sources have hinted that one particularly mobile telco has been pushing for a fixed line license so that may just be what the government is trying to do with this new Universal Access license category – to allow all telcos the opportunity to offer fixed line services if they so wish.

International Wholesale Traffic (IWT)
Elsewhere, International Wholesale Traffic (IWT) licensees have the mandate to go abroad and negotiate contracts to bring in overseas traffic into their country of origin. These are private companies who negotiate these deals themselves and offer competitive prices so they could win contract for carrying international traffic.

Currently, organizations like Tata Mobile and Belgacom, who bring traffic from overseas into Ghana are not local companies. But an International Wholesale Traffic license regime will create local companies who will then go out there and bring in traffic. But these companies may not have their own gateways so they will still use the telcos’ gateways as the entry point for the traffic they bring in. So if they, for instance have traffic for MTN they can just use the MTN gateway, or use the gateway of any other telco which offer cheaper rates for terminating those traffic.

Meanwhile, the local telcos, who use their mother companies abroad to negotiate deals for bringing traffic into Ghana, would continue to do so in competition with the local IWT licensee.

These are all good policies, but the big question is, who are going to get those licenses to implement them? It would appear that very often such nice policies are made just to make room for certain particular people to get into certain sectors and become conduits for lining the pockets of certain interested persons.

It may be worth considering to restrict these licenses to local investors rather than opening them up for foreigners to also come in. This is because the mainstream telecom industry is currently dominated by multinationals, with very little local involvement at the top. The banks and funds, which operate in Ghana should consider supporting locals with the expertise to raise the needed capital to deliver on these mandates. Story by Ghana|Adom Business|Samuel Nii Narku Dowuona/[email protected]/

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