Telecom regulator starts discussion on permitting virtual networks

May 5th, 2008 - 5:23 pm ICT by admin  


New Delhi, May 5 (IANS) The Telecom Regulatory Authority of India (TRAI) Monday initiated a discussion among all stakeholders of the industry on allowing mobile virtual network operators (MVNOs) in India. MVNOs buy airtime from mobile network operators (MNO) and sell it under their own brand name. While it is the operator who builds and runs the network, the MVNO looks after marketing, branding and customer care.

The main difference between a franchisee and MVNO is that MVNOs add value to the service and offer differentiated service to niche market segments. MNVOs do not have their own spectrum. They share spectrum with the parent MNO.

Globally, there are more than 300 registered MVNOs and it is gradually emerging as a booming market within the telecommunications space.

“The MVNOs may benefit MNOs to expand the market by reaching entirely new or previously unserved/underserved market segments or geographical area,” TRAI said in a statement.

“It could also lead to better network utilisation and realisation of economies of scale. The MVNOs may thus help widen and deepen the market of MNO,” it added.

The watchdog has recommended entry of as many MVNOs as possible as long as they intend to conduct serious business in India.

The discussion paper issued by TRAI provides for consultation and debate on several issues such as the definition of MVNO, MVNO models, regulatory approaches, sharing of spectrum and licensing issues, among others.

It also discusses the business potential of the MVNOs such as offering services with low price, focusing on specific customer segments, offering differentiated value added services and international clustering.

Current Indian telecom laws do not allow MVNOs to operate and a policy on this would require guidelines from the regulator and the government.

According to industry sources, the Department of Telecommunications (DoT) had asked TRAI to initiate consultations among all stakeholders to study the viability of allowing MVNOs.

A final policy on this is expected by the end of the year, the sources said.

The debate started after Mumbai-based Tata Teleservices in March entered into a partnership with Britain’s Virgin Mobile to offer value-added services.

Other operators termed this a “backdoor entry”, and urged the government to clarify the partnership as it was on the lines of a MVNO.

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