The Hindu Business Line : DoT may slap curbs on mobile cos’ merger with virtual network operators

New Delhi, Nov. 5 In a bid to increase competition in the mobile services space, the Department of Telecom may restrict a merger between a mobile company and Mobile Virtual Network Operator (MVNO) in the same circle.

DoT is also considering allowing MVNOs to get into an agreement with any number of cellular companies in a circle to offer services. This is contrary to the recommendations of the telecom regulator which had said that merger between mobile companies and their MVNOs may be permitted. TRAI had also said that virtual operators should not be attached to more than one operator in a circle.

MVNOs do not own spectrum or infrastructure. It buys airtime from existing mobile operators on wholesale and then resells it to consumers under its own branding and tariff plans. Usually, MVNOs target a specific user group like the youth or women. Companies with an existing retail and distribution chain are ideally suited to become an MVNO. In India, virtual operators are not allowed to offer services at present.

TRAI recommendations

TRAI had given its recommendations on August 6 to permit virtual mobile players to give consumers greater choice. An internal committee set up to evaluate the suggestions has submitted its report to the DoT in which it has accepted most of the suggestions made by the telecom regulator but have differed on key issues.

While the regulator had said that the licence of the MVNO shall be terminated if the licence of the parent mobile operators gets terminated, the committee has proposed that MVNOs can partner any number of operators and, therefore, its licence should not be terminated if one operator gets out of business.

“The recommendation of TRAI is not considered MVNO-friendly and is likely to result in captive MVNOs that may lack in viability,” the committee’s report said. It said that by allowing virtual operators to partner unlimited number of operators in a circle, it will “increase competition in the retail market and also enable an MVNO to serve customers through another operator’s resources if the services of a particular operator prove unsatisfactory.”

Entry fee

The panel has also proposed to keep the entry fee for MVNO at 5 per cent of the fee paid by the mobile operators for each circle. TRAI had suggested a 10 per cent fee. The committee said 10 per cent could be on the higher side.

The committee’s report will be taken up by the Telecom Commission which will draft the final policy for permitting MVNOs in the country.

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