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Cape Town - South Africa is ready for a serious mobile virtual network operator (MVNO), says the CEO of the latest player in the local market.
"I think a couple of years back when Virgin came into the market, I don't think the market was ready for MVNOs, and I often think that these things are about timing," Brett Howell, CEO of me&you mobile told Fin24.
The operator launches its network officially on Monday and has opted for an aggressive pricing strategy that reflects the company's determination to have low overheads.
"We have a full e-commerce website which we'll be launching on May 4. You sign up, pay, get delivery and mange your profile online," Howell said.
Mobile contracts have long been the staple for South Africans who want the latest handsets but don't have the upfront cash to buy them.
Grudge purchase
As devices become more sophisticated, the contract price in some areas has been trending upward even though many lower smartphones are hitting the market.
Some also regard data which is critical to the smartphone experience, as a grudge purchase.
"In the recent weeks and months, we've seen frustration building up with customers and we feel the offer and the way people are going to engage with us - the fact that we don’t tie them into a 24 month contract; we offer best value voice rates in the market; the fact that you can do everything from the comfort of your chair online is something that’s completely unique," Howell said.
Watch this News24 Live video on how me&you mobile will make a success of the MVNO market in SA:
But MVNOs do not have a healthy reputation in the country.
Virgin Mobile has demonstrated that the MVNO market in SA is fraught with difficulty. While the company launched as a joint venture with Cell C in 2006, it has still to hit one million subscribers in SA. That's far below the 31 million and 20 million Vodacom and MTN subscriber numbers.
However, internationally, there has been some success for MVNOs.
Some operators are able to offer lower retail prices than even their host networks due, in part, to lower overheads and lean organisational structure.
Legal framework
But the industry is lobbying for a regulatory framework that could see consumers offered a plethora of choice.
"It would not be acceptable to introduce roam-like-at-home (RLAH) without modifying wholesale regulation. MVNOs have no bargaining power concerning wholesale roaming rates and rely on effective wholesale regulation," Jacques Bonifay, chair of the European Association of Full MVNOs (EAFM) said at a recent meeting of the Body of European Regulators for Electronic Communications.
According to the EAFM, it seeks to establish a legal framework that would see the industry develop "fair access to the wholesale mobile market and fair competition on the retail mobile market to the benefit of consumers".
Howell indicated that while SA was somewhat behind the curve in the MVNO industry, he hoped the country would catch up.
"Obviously those markets are a bit more established in terms of the number of MMVOs, and we are hoping that the market in South Africa follows suit."
Orange has stated its intention to build an MVNO, but the global mobile operator has taken a wait-and-see approach in SA.
Competition
"Becoming an MVNO is part of our plan. We aim to launch offers that present end consumers with innovative and new services," Sèbastien Crozier, Orange Horizons CEO told Fin24.
For Howell the prospect of competition with a giant like Orange doesn't put him off; in fact he welcomes more players into the market.
"We hope that with more MVNOs into the market, we will see a range of options available for customers and that just serves us better and gives weight to the MVNO category as a whole."
Watch this News24 Live video on why me&you mobile will roam on Cell C:
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