Govt okays MVNO services

DoT guidelines after clarifications from Trai

If not 3G (third generation) telecom service during the current UPA regime, the government has ensured that at least mobile virtual network operation (MVNO) comes into India soon.

Six months after the Telecom Regulatory Authority of India (Trai) recommended introduction of MVNO service, the government has accepted it.

The Department of Telecommunications (DoT) will now issue the MVNO guidelines —- but only after it receives clarifications from Trai on certain issues.

It is believed that applications from many global MVNOs are with the DoT.

Across the world, there are around 360 planned or operational MVNOs.

UK-based Virgin Mobile, which recently tied up with Tata Teleservices for a franchisee agreement, is also an MVNO.

Following a buzz that the Tata Teleservices-Virgin Mobile JV may be offering an MVNO service, the Indian telco had clarified that it was only a franchisee agreement.

Till now, MVNOs were not permitted in India even as several companies were keen to enter the telecom space in India without having to own spectrum.

According to Trai's recommendation of August 2008, 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. Trai has justified opening up the telecom market to MVNOs saying 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.

Trai said, "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, Trai 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 net worth 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, an MVNO would be responsible for the quality of its service.

Nivedita Mookerji/ DNA-Daily News & Analysis Source: 3D Syndication