The Hindu Business Line : Global telcos eye ‘virtual route’ for Indian mobile foray

New Delhi, June 6 With acquiring a new telecom licence in the country becoming a daunting task, global telecom majors including BT (formerly British Telecom), Verizon and France Telecom have approached the telecom regulator to open up the mobile market for the entry of Mobile Virtual Network Operators (MVNO).

MVNOs are a category of service providers who take bandwidth and infrastructure on wholesale from existing mobile operators and then resell it in the market with their own branding and tariff plans. With more than 300 applications for a new telecom licence awaiting clearance from the Department of Telecom, chances of these global players entering the fastest growing mobile market appears slim unless they acquire or decide to bid for 3G spectrum whenever the policy is announced.

Infrastructure-free

Through the MVNO route, these telecom companies will be able to foray into the mobile space without owning any infrastructure or spectrum or even waiting for a licence.

Virgin Mobile’s recent partnership with Tata Teleservices, though stops short of being an MVNO, will also evolve into one once it is made legal.

Pushing its case to allow MVNOs in India, BT, in a letter to TRAI, said, “MVNO is seen as a natural progression towards enhancing free market principles and contributing to the efficient use of existing telecommunication infrastructure. MVNO will not only provide customer with wider bouquet of services and value-added service, it will also serve to introduce greater competition, which should in turn bring down the telecom prices.

It will bring in global telecom operators wanting to enter India, many of whom have already operated in the MVNO model successfully to share their expertise.”

Irrelevant to India

However, some of the existing mobile players, including Bharti Airtel, Reliance Communications and BSNL have taken a stand that MVNOs may be irrelevant to the Indian market. “Tariffs in India are amongst the lowest in the world, the market penetration is only 25 per cent, and all the service providers are aggressively rolling out their networks to enhance penetration in rural areas. Under these circumstances, the concept of MVNO seems to be premature at this point of time,” Bharti Airtel said. They have also suggested imposing licence fee and roll-out obligations on MVNOs if the Government permits it.

Opposition from existing players could wilt the global telcos’ strategy because they may find it difficult to find an operator who would be willing to share infrastructure. To overcome this problem, multinational companies have sought TRAI’s intervention.

What may work for the global players is the presence of operators who are not in the top 4 in terms of market share and are willing to lease out their infrastructure. Existing operators such as Tata Teleservices and Spice Communications are in favour of permitting MVNOs.

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