The Hindu Business Line : Allow virtual mobile operators: TRAI

New Delhi, Aug. 6 Telecom Regulatory Authority of India on Wednesday recommended that the Government allow Mobile Virtual Network Operators (MVNO) in the country. MVNOs do not own spectrum but buy capacity from existing mobile operators and then resell it under their own branding and tariffs.

The regulator suggested that there should not be any bar on the number of MVNOs . This will give consumers a much larger choice. “The introduction of MVNO is seen as a natural progression towards enhancing free market principles and contributing to the efficient use of existing telecommunication infrastructure,” TRAI said in its recommendations.

If the Government accepts TRAI’s suggestions, consumers could soon have as many as 20 mobile service providers in each circle ) with a wide choice of tariff packages and schemes targeted at a specific user base.

With acquiring a new telecom licence in the country becoming a daunting task, global telecom majors including BT, Verizon and France Telecom are all betting on entering the fastest growing mobile market through this route. 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.

Licence fee

However, some of the MVNOs may find the licence a bit expensive. The regulator has suggested that any Indian company having a net worth of Rs 10 crore for Metro and Category A circles, Rs 5 crore for Category B and Rs 3 crore for Category C service area will be eligible to apply for MVNO licence. An entry fee, annual licence fee and spectrum charges are to be levied on MVNOs.

Mixed reaction

While everyone acknowledges the benefits of permitting MVNOs, not all agree on the success of the business model. In the international market, MVNOs have so far evoked mixed reaction. Globally, there are about 350 virtual operators of which some have found success, including 20 in Denmark who have captured nearly 25 per cent of the market from existing players. But others in the US such as Walt Disney have not found much success.

Back home, 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. While these existing players are not opposing the introduction of MVNO, they warn that too much competition may kill the telecom growth story.

Reluctance from some of the large existing players could wilt the MVNO’s opportunity because they may find it difficult to find an operator who would be willing to share infrastructure. Moreover, the existing operator’s wish to protect their own brand name could result in a turf battle in case any of the MVNOs succeed.

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