Telcos as catalysts, or not?

Are mobile network operators losing their ground within the African innovation marketplace?

Since the early nineties, mobile network operators have been one of the biggest catalysts in introducing new distribution and resell models into the markets by connecting remote communities with main stream markets. In the early days, text messaging and the introduction of prepaid airtime enabled a plethora of premium rated value added services, and accelerated the distribution and sales of mobile phones, mobile accessories and prepaid airtime vouchers.

Today Africa is still the leading market globally in how small businesses and large retailers are using USSD, text messaging and now mobile applications to connect and transact with their customers. As the penetration of smart phones and access to higher speed Internet, e-commerce, payment and financial services accelerate on the continent, the question remains whether mobile network operators will remain the key catalysts for growth and adoption of new digital and transactional services.

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Mobile operators have great infrastructure to enable e-commerce transaction through the charging, collection and billing of various services because of the vast points-of-presence they have built in their markets, and as such could remain key catalysts in enabling the digital economy in their markets.

That said, with new payment solutions and services and other virtual currencies starting to emerge that are allowing more merchants to transact with their customers via traditional Internet and digital models, mobile operators may find themselves disintermediated sooner than later in the value chain.

The models introduced by these operators that served the growth of new services well in the past are slowly becoming obsolete and have become costly to deal with. A key barrier for adoption of digital services and digital commerce still hinges on the ease of transacting as a merchant and customer. This is no longer the domain of operators, and a number of newer players are emerging that are solving these problems.

Armed with a mobile website or application and integration into these newer players, merchants no longer need the mobile operator apart from providing connectivity. Other players are becoming better positioned to be catalysts in the African markets for the digital economy.

Unless operators are opening up their network and IT platforms as open platforms to enable innovative services in partnership models with innovative companies, they may soon lose the position of catalysts in their markets.

About the Author

A former CIO at Cell C, Maria Pienaar brings two decades of experience working in the San Francisco and Silicon Valley tech industry to Blue Label Ventures. Over the duration of her career, Maria has helped launch over 30 successful wireless and Internet applications and services for enterprise and consumer markets. As Cell C’s CIO, she launched the first Wi-Fi Calling service in Africa as well as innovative partnerships with the likes of Facebook.

This article is featured on the State of Play report. To receive a free copy of the report click here.

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