While there is immense opportunity for mobile network operators (MNO) in Africa, the reality is that they are under pressure to keep costs as low as possible in order to remain competitive. However, relying on old, inefficient back-end systems is holding many of them back, leading to unnecessary wastage and spiraling costs. Modernising their systems, which is far less painful than businesses might imagine, can optimise costs and drive agility and competitiveness.
To better understand the problem, let’s take a brief look at how many MNOs provision SIM cards and why it is a recipe for wastage. Mobile operators purchase SIM cards in bulk and they are paired with mobile number ranges upfront. This traditional model requires pre-provisioning the entire SIM card batch onto the Home Location Register (HLR), a central database that stores subscriber information like their unique ID, current location, and authentication keys and on their Charging System.
In most cases, mobile operators pay licensing fees on all numbers provisioned on these systems — even if those SIM cards haven’t yet been activated and sold to customers. As a result, they pay for unused numbers, with significant wastage. What does this wastage look like?
License fees are charged based on the number of mobile numbers stored on these systems. Let’s imagine a mobile operator has licensed, say, 3-million SIM cards. Ordinarily, there would be nothing wrong with that, except that in practice many providers have far fewer active subscribers than the number of licenses they hold. What if this operator only has 1-million active users? In that case, the MNO is paying for 2-million subscribers it doesn’t yet have which translates into significant, yet unnecessary, costs.
The irony is that despite pressure to contain costs, MNOs need to continually purchase new batches of SIM cards, especially when the existing inventory becomes partially or totally obsolete, yet they can’t cancel unused SIM cards. Practically speaking, an operator cannot deactivate a SIM that is not active because it just doesn’t know the status of the SIM – it might be sitting on a shelf at one of multiple sales outlets and be sold tomorrow. This reality prevents wholesale deactivation of SIM cards. And so, the status quo continues.
The solution to this problem lies in only provisioning SIM-number pairs (i.e. numberless SIM cards) when a customer actually activates a SIM card and completes the onboarding process This provisioning-on-demand approach, which is only possible with modern, agile architecture, means the operator pays licensing fees only for numbers that are actively in use and generating revenue, not unused numbers sitting in their systems and linked to SIM cards spread out across various vendors. As a result, operators have more flexibility on managing SIM card distribution.
It is not far-fetched to estimate that by switching to a software solution that can provision SIM cards on demand effectively, operators could save up to 50%, and in some cases even more, on their system licensing costs and regulatory number plans costs. Operators who do switch to this modern approach enjoy direct cost savings, with guaranteed future cost optimisation. In addition to this, they streamline their subscriber activation process, lower the cost per acquisition, and enjoy optimised asset and inventory utilisation.
Perhaps the most exciting thing about the paradigm shift this capability represents is the potential for greater competition in the mobile market, where smaller operators are able to be more agile and aggressive in their pricing and service offerings.
It is of paramount importance that mobile operators seek out technology partners who understand the industry and have a proven provisioning-on-demand solution that is tried and tested across tier one networks. This way, operators are assured of reliability with minimal disruptions because the end goal should be improving efficiency and driving down costs by eliminating wastage on SIM card license fees.
By Craig Palmer, Chief Executive Officer at VAS-X
