MVNO Yet to Appear in Pakistan

Pakistan Telecommunication Authority has failed to come up with any frame work for Mobile Virtual Network Operator (MVNO). According to Mobile Cellular Policy, PTA was due to prepare a detailed guideline and procedures for MVNO before January 28, 2006.

For those who are not familiar with MVNO, let me define this phenomena for you. A mobile virtual network operator (MVNO) is a cellular company (it can be a landline or WLL company too) that provides mobile/landline phone services but does not have its own network. They buy traffic (huge minutes) on wholesale rate from cellular companies and then resale them with their own brand name and prices to end users. MVNO companies are not sufficiently required to install their physical network. However, they normally have their billing system along with customer support and other departments.

Now getting back to its applicability in Pakistan, Mobile Cellular Policy that was approved by the government of Pakistan clearly says that cellular companies will be permitted to allow MVNO’s operators in the country.

Despite of couple of failure examples, MVNO is largely accepted and encouraged by regulatory authorities globally. Not only this, telecom companies like MVNO model too, as they help them grow their network.

  • Presence of MVNOs will help telecom companies to focus on network expansion, hence leaving the marketing/branding job for MVNOs. This model saves operational expenses and enhances company’s performance as well.
  • MVNO’s are considered as a means of encouraging competition that ultimately lead to more choices for services and lower prices.
  • Revenues are shared amongst partners, thus helping the national economy
  • Multiple MVNOs affiliated with a single mobile operator can individually target their niche market, for instance one MVNO can focus on Postpaid Customers and while the other can stress and cash the value added services. This process benefit mobile operator, MVNO and end users alike.

Through sources, and discussion on TGP, I know that Mobile Zone has been showing great interest for last couple of years to get an MVNO license in Pakistan. But the sluggish attitude by PTA and even some mobile companies are not favoring idea of MVNo, the sector is yet to see any MVNO operator in the country.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK


  • Tauseef Zahid

    I am not sure if there is a niche available in Pakistan, plus with the number of MNOs operating i don think MVNO will survive.. what are your thoughts on this?

  • Touseef we have seen many examples of MVNOs in the world both the success stories and failures; that’s true, MVNO businesses greatly depend on the competition in the market along with comes the penetration rate as a decisive factor.

    What i see favorable situation in Pakistan is the total number of heads in the country. With more than 160 million people around, i see opportunities for revenue sharing among many of Telecom companies.

    Another thing that can add a positive mark is that this is maybe the only chance for any Pakistani company to share telecom revenues. Otherwise, the total value of investment required, I doubt that Pakistani investors are not in position to fight with multinational telecom giants.

    Furthermore, the attitude telecom companies are showing, they seem tired and earning less money than before. MVNOs can bring them back to the glory they were enjoying. This can be achieved through combined effort by MNOs and MVNOs (Where MVNOs will work for themselves and ultimately for their MNOs)

    And most important thing is that this was part of mobile policy, which was supposed to be implemented. PTA could have brought forward its guidelines way before than other essentials like MNP and IMEI etc…

    Anyone not agreeing with me??? is welcome to comment

    Regards,

  • Daniel J. Doughty

    It seems to me that telecom companies reselling their services to MVNOs is an inherent conflict of interest. In essence, a telecom company has to admit that there is a sub-community that is underserved by it’s current marketing and business principles. Big companies aren’t very good at being humble, so if they do allow for an MVNO to resell their service they end up charging such a premium for access that it’s difficult for the MVNO to make any profit.

    I also understand the niche argument, which is that the MVNO will sell such unique content that it’s stands out as an individual brand. This new brand will offer such amazing services that it justifies paying a premium to the MVNO. Unfortunately, the walled garden effect is what is hindering the niche growth in MVNOs.

    People don’t just purchase service from their cell companies. They enter into an agreement where they learn all the rules of being a customer of XYZ telephone company. They know that if they call after 9pm that anyone they call who has XYZ service will not get charged for the call. Or they know that if they want to send a picture of something cool that they can send that picture to family members who also have service on XYZ service. Now, if the phone company allows for intercarrier picture mail(something that’s been slowly adopted in the US) then some of this walled garden breaks down. But in essence, it’s not enough to have access to cool content. You need to way to show off that cool content to friends and family. But if your friends and family don’t use the same MVNO then you can’t share that content with them.

    Now, my observations are based mostly on the American market, so it may not be applicable to Pakistan.

  • Tauseef Zahid

    Aamir Attaa, i have two comments one which may be a short term solution is to allow MVNOs and let them explore the niche, India is a good example where they just recently start exploring the MVNO option their huge market (X) low ARPU still produce more profit than some of the big MNOs in western Europe. So I take it that they allow MVNOs and they explore a niche e.g. buy a $10 phone and get no hassle 200 minutes which may become very popular in rural areas..

    the long term solution cannot be to let the foreign MNOs come in and plunder PK economy with money flight and resources.. There should be one government owned MNO which then can be later on sold to PK companies on a tender/bid bases.. I guess that’s true most cases- the political will is missing to make decisions which are in PK interest.