Delayed MVNO Framework Puts Pakistan’s 5G Spectrum Auction at Risk
The Ministry of Information Technology and Telecommunication (MoITT) has yet to approve the Mobile Virtual Network Operator (MVNO) framework, which was supposed to be finalized before the upcoming 5G spectrum auction. The delay has raised concerns within the telecom industry, as the framework was expected to provide clarity on spectrum requirements, enabling informed decision-making during the auction.
MVNO Framework and Its Objectives
The Pakistan Telecommunication Authority (PTA) drafted and submitted the MVNO framework to the MoITT for approval. However, despite significant time passing, the ministry has not yet given the green light. The primary objective of the framework is to encourage new investments and foster further growth in the telecom sector by allowing small companies to operate under their own brand names while leasing network services from Mobile Network Operators (MNOs).
Under the proposed framework, MVNO licenses would be issued for an initial period of 15 years, renewable based on mutual agreements between the parties. The initial license fee is set at $140,000 (or its equivalent in Pakistani Rupees), payable upfront at the National Bank of Pakistan (NBP) Telegraphic Transfer (TT) selling rate prevailing on the day before payment.
Revenue Sharing and Regulatory Obligations
MVNOs would be required to pay all annual regulatory fees and contributions, including the Universal Service Fund (USF) and Research & Development (R&D) contributions. These fees would be calculated based on the total annual gross revenue from the combined licensed services of the MNO and MVNO. However, interoperator costs and PTA-mandated payments would be eligible for deductions. Any costs charged by MVNOs back to MNOs would not be deductible for MNOs when calculating regulatory fees.
If an MVNO’s agreement with a parent MNO is terminated before the 15-year term expires and the MVNO has no other valid agreement, its license would be suspended. The license would only be restored upon submission of a new agreement with an MNO.
MVNO Models and Operational Scope
The framework outlines four MVNO models, each with varying levels of operational independence:
- Reseller – Uses its own brand and marketing strategies but can only offer services provided by the parent MNO. No network infrastructure installation is allowed.
- Service Provider – In addition to branding and marketing, the MVNO handles customer care and billing. However, it must still rely entirely on the parent MNO’s infrastructure.
- Enhanced Service Provider – Can offer customized services alongside those of the parent MNO. Limited installation of telecom network elements is permitted.
- Full MVNO – Allowed to provide all services offered by MNOs, including branding, marketing, and installing core network elements. However, access network elements cannot be installed.
MNOs and MVNOs must submit a technical and business plan, along with a draft commercial agreement, to the PTA for approval before a license can be issued.
Service Quality and Regulatory Compliance
MVNOs would be fully responsible for ensuring service quality meets PTA benchmarks. As they would own their customers and market their own SIMs, they must provide uninterrupted services. Any disruption or suspension of services by an MNO would require prior PTA approval.
Additionally, MVNOs must comply with national security regulations, including Lawful Interception (LI) and data record requirements. The framework mandates that all agreements include clauses addressing security concerns.
MVNOs must also establish at least one customer care center per city where they operate, along with a 24/7 nationwide helpline to handle customer complaints and service-related issues.
Impact on 5G Spectrum Auction
The delay in approving the MVNO framework has created uncertainty around the 5G spectrum auction, scheduled for later this year. Without the framework, operators may hesitate to bid for spectrum, as they would lack clarity on how much they need to allocate for MVNO partnerships. This could result in lower participation and reduced government revenue from the auction.
Industry stakeholders urge the government to expedite the approval process to ensure the successful introduction of both 5G technology and MVNO services in Pakistan.
