How dynamic provisioning can help African operators drive efficiencies
Wireless operators in Africa are having to manage rapid and accelerating growth in the SIM card volumes they stock. This trend is likely to continue into the future as there is a particularly strong potential for future growth in the region’s mobile communications market.
While mobile telephony is now widely available, penetration is generally lower than in many other parts of the world and there are still substantial under-served markets – in rural areas the rate of mobile penetration is typically below 10 per cent.
“By 2015, there will be 265mn mobile broadband subscriptions in Africa, a huge increase from the current figure of about 12mn, and accounting for 31.5 per cent of the total of 842mn mobile subscriptions that the continent will have in five years’ time,” according to forecasts by analyst company, Informa Telecoms & Media.
Low ARPUs
At the same time, African operators also have to combat the problem of low ARPUs across the region. These are declining further at the moment due partly to price wars in a number of markets, particularly in Kenya, Tanzania and Egypt. A recent report by analyst, Wireless Intelligence revealed that monthly mobile ARPU in Africa stood at $10 in the fourth quarter of 2010, compared to $10.34 a year ago. ARPU in Western Europe was $30.30
As a result, African operators are strongly focused on subscriber acquisition. And to achieve this, they need to distribute high volumes of SIM cards to subscribers. To do this, operators use a wide range of distribution channels ranging from branded stores to independent small traders who have no significant retail infrastructure.
Scoping out the Process
Most operators employ a process where SIM cards are pre-provisioned in the network before shipping into distribution channels but as card volumes increase, the operator typically experiences growing problems both with the availability of resources and with inflexibility in supply chains.
The key issue with pre-provisioning is that it requires the allocation of core network capacity and resources well in advance of a card actually being used. With this approach each SIM card, whether or not it is being actively used by a subscriber, has a MSISDN (telephone number) allocated to it.
By rigidly linking the SIM and MSISDN, the approach impedes the ability of operators to be agile and respond quickly to market pressures and competitive initiatives. This lack of agility is a particular concern in countries that have complex SIM supply chains and those with regional numbering.
In this latter case, operators are restricted because the MSISDN number associated with the card is printed either on the SIM card itself or on the packaging with which it is shipped. The SIM is then tied to that number and because the number is linked to a particular region, it will only make sense for operators to sell those SIM cards in that specific area.
Use of MSISDNs
There can also be issues in regions where telecoms regulators impose constraints on operators’ use of MSISDNs. While in some countries, typically those with high available capacity, blocks of numbers will be freely allocated. In others, regulators will insist operators are making efficient use of the numbers already allocated before they allocate any more, or charge for additional allocations.
In many African countries, the situation is made more complex still by the need to manage a complicated distribution structure involving a tangled web of distributors, dealers, sub-dealers and retailers.
The traditional pre-provisioning approach often means that a SIM card can only be used for a certain product - for example prepaid, postpaid, or SIM-only. This results in retailers having to hold several different types of stock, making forecasting complex, increasing wastage, and recall costs.
For African operators having to deal with the issues outlined above, simplifying SIM card logistics and distribution processes can be key to driving enhanced business agility. And in an ever more competitive telecoms arena, with ever increasing numbers of SIM cards being distributed to end-users to help drive market growth, incremental revenue streams, or to sustain a churning subscriber base, this is becoming an increasingly urgent requirement.
Improving SIM Supply Chain Flexibility
Up until relatively recently, the only alternative to pre-provisioning has been provisioning at point of sale. Unfortunately, this approach requires a retail infrastructure that limits the choice of distribution channels, therefore making it particularly unattractive to the African market.
Fortunately, there is an alternative approach to pre-provisioning, now becoming increasingly popular with operators across Africa that enables the allocation of network resources to be deferred until the point of first use. The approach, based on the principle of dynamic provisioning enables new SIM cards to interact with the provisioning process via the mobile network, despite not having previously been provisioned.
Using the dynamic provisioning approach, SIM cards can be ordered that have no geographical constraints and needn't be provisioned in the network. There is no requirement to print numbers on the SIM cards or packaging as the number will not even be set until it is chosen at the point of first use.
Consequently, SIM cards can be dispatched to any region, moved any number of times between regions and retailers, and used for any product. Generic SIM card starter packs can be shipped anywhere within a country and even redistributed if there is a shortage in a particular region.
Operators can respond quickly to urgent calls for new stock. They also have the peace of mind of knowing that there will be less urgent requirement for MSISDNs that never get used, so it is a more efficient process as well.
Because many operators have multiple brands or tariffs, a generic card can also allow the subscriber to choose the plan they want. This further saves SIM-card and distribution costs and allows dealers to stock a smaller range of items.
Looking Ahead with Confidence
It is clear that in African countries with complex SIM supply chains, including those with regional numbering and those with complicated distribution structures, simplifying SIM card logistics and distribution processes can be key to driving enhanced business agility.
This is a longstanding problem and is likely to remain an issue for the foreseeable future.
As we have seen, operators now have an approach that offers the potential to resolve this issue - and they are increasingly looking to activation systems that allow them to streamline SIM card logistics and consequently achieve business agility and competitive edge.
by Bill Chard VP Product Management, Evolving Systems
