The Nigerian Communications Commission (the "Commission") recently released the License Framework for the Establishment of Mobile Virtual Network Operators (MVNOs) in Nigeria (the "Framework").
Over the years, Mobile Network Operators (MNOs) such as MTN, Airtel, 9mobile, amongst others, have thrived and made immense waves in propelling the Telecommunications ("Telecoms") sector in Nigeria. With the advent of MVNOs, the Telecoms sector has created increased opportunity for entry and competition within the industry.
This article summarizes the requirements for obtaining an MVNO license and the guidelines for operating within the ecosystem.
What is an MVNO?
A MVNO is a telecommunication service operator that rides on the capacity of an MNO or a licensed service provider. The difference between an MVNO and an MNO is that an MVNO does not own the infrastructure required to provide mobile network service, as it primarily leases the infrastructure from an MNO, and resells it to its customers at reduced prices/retail prices.
What are the criteria for eligibility?
The criteria for obtaining an MVNO license include:
(i) The applicant must be a corporate body;
(ii) The Applicant is required to file a contract with an MNO at the Commission;
(iii) The applicant must meet the technical requirements of the Commission for its tier of choice;
(iv) The Applicant is required to show proof of local content in its ownership and service delivery.
What is the procedure for obtaining a license?
The licensee must complete an introduction form and submit a PBG (Performance Bank Guarantee), FBG (Financial Bank Guarantee), and a summary of capital structure proving its capacity to fund and maintain its operations through the tenure of the license, and other requirements stipulated by the Commission.
What is the Tenure of a license?
The license shall be valid for a period of 10 (ten) years, with an option to renew for another period of 10 years, provided that the requirements for renewal are met. The Commission also reserves the right to suspend or revoke a license after its issuance if the MVNO flouts any of its requirements or guidelines for its operations.
Does the Framework regulate the relationship between the MNO and the MVNO?
It is interesting to note that the Framework does not provide a specific regulation for the guidance of the relationship between the MNOs and the MVNOs. It merely stipulates that the contractual agreement binding them will serve as the reference for their engagement. The Framework also provides that the terms of a contract should be fair and the parties should act in good faith.
What are the Categories of Licenses and their peculiarities?
i. Services Virtual Operator (Tier 1) – These operators can provide only one of the following services, which include:
a. owning a brand,
b. owning a sales and distribution channels,
c. owning content/applications,
d. hosting and distributing value-added services (such as ring tones, voice mail, top up e.t.c).
They do not own any switching or Intelligent Network (IN) infrastructure for provision of value-added services. Simply put they do not own a network that can allow them provide basic services like voice calls, fax or text services or provide value added services (such as ring tones, games, call directory services). They rely on the host licensee to deliver their products and services to their customers.
ii. Simple Facilities Virtual Operator (Tier 2) – These operators do not have core switching and interconnect capabilities but can set up their own Intelligent Network infrastructure to provide their own Intelligent Network services to the customer. In other words, they do not have the infrastructure to provide basic services like voice calls, fax, or text services, however they can provide value added services to their customers. The areas in which the operator can provide services under this category include owning and issuing sims, owning, and operating the provision of value-added services. In addition to any one of these services, they may also provide the services listed under Tier 1.
iii. Core Facilities Virtual Operator (Tier 3) – These operators have the capacity to launch and operate a full core network with switching and interconnect capabilities. This means that they can provide basic services like voice calls, fax, or text services. Nevertheless, the operator relies totally on its host to provide the telecom infrastructure (of voice and data communication) to deliver these services to its customers.
iv. Virtual Aggregator/Enabler (Tier 4) – The operator stands as a middleman between the MNO and multiple MNVOs. The aggregator facilitates the purchasing of bulk capacity from a licensed network operator and resells it to multiple MNVOs, while the enabler provides a platform for MNVOs to outsource their business and operations systems, so they can focus on the sales, marketing, and distribution. In order to improve national coverage, these operators are permitted to directly engage customers within an underserved and unserved region.
v. Unified Virtual Operator (Tier 5) – An operator within this tier can decide the level of service it desires to offer ranging from tier 1 to tier 4. This gives the operator freedom of choice to provide its services the way it deems fit.
It appears that the aim of the Commission is to encourage and ensure a conducive regulatory environment that facilitates growth and development in the Telecommunications sector, through the different services offered by the operators. This will also complement the efforts of the current government on the ease of doing business initiative, spur growth and extend telecommunications services to the rural, unserved, and underserved communities in the country.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.