Mobile virtual network firms get green signal
NEW DELHI; More than five months after the launch of the Tata-Virgin Mobile joint venture, the Telecom Regulatory Authority of India (Trai) has recommended allowing MVNOs (mobile virtual network operators) in the country.
According to Trai, there should not be any limit to the number of MVNOs attached to a mobile network operator. However, an MVNO can't get attached to more than one operator.
Some sections in the industry had called the recent Tata-Virgin venture an MVNO, something that is not permitted in India. The Tatas had maintained that their JV was only a franchise agreement, and not an MVNO.
It is believed that applications from many global MVNOs are with the department of telecommunications. Across the world, there are around 360 planned or operational MVNOs. UK-based Virgin Mobile also offers MVNO services in other parts of the world.
While top government representatives had indicated way back in March that the government was open to the idea of allowing MVNOs, DoT sought Trai recommendations on the issue. Now with the regulator giving a green signal, the era of MVNOs seem to be round the corner. Interestingly, in its recent 3G (third generation) telecom policy, the government touched upon the issue of trading and buying of spectrum, something that is integral to the MVNO concept.
An MVNO is a licencee in any service area that does not have spectrum of its own for access service, but can provide mobile phone service to its own customers through an agreement with the licensed mobile network operator.
The regulator has justified opening up the telecom market to MVNOs by saying that India is witnessing exponential growth in the sector. India is the second-largest mobile telecom market in the world after China in terms of subscriber numbers. As of end of June, there were 325 million telephone connections in India, out of which 286 million were mobile users. The monthly addition is around 8 million subscribers in the country.
According to Trai, "to maintain such exponential growth, the challenge is to optimally utilise the available resources while ensuring competition and availability of services at affordable price." The regulator sees introduction of MVNOs as a natural progression towards enhancing free market principles and contributing to the efficient use of existing telecom infrastructure.
Trai has recommended introduction of MVNOs as a distinct service provider with its own licensing and 'light touch' regulatory framework. Although MVNOs can choose their own business models, they would not be allowed to set up radio access network and base stations etc.
A 20-year licence would be granted to an MVNO, the regulator has said. But, the validity of MVNO licence shall be co-terminus with the validity of the parent mobile network operator. MVNOs must follow the norms related to FDI limit, substantial equity and mergers, as applicable to telecom service providers now.
An MVNO must have at least 10% of the networth specified for a mobile network operator. It must also have 10% of the paid-up capital of the mobile network operator.
Trai has recommended that a mobile phone service provider would pay spectrum charges also on the revenue of MVNOs. And the subscribers of the MVNOs should be counted towards the parent MNOs for the purpose of spectrum allotment by the government.
To make things easy for MVNOs, the entry fee would be nominal. But, whenever an MVNO is offering a service, it would be responsible for the quality of service.