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Mobile virtual network operators, or MVNOs, may find the going rather tough in the Indian telecom sector, which already has the lowest rates and where consolidation is long overdue.
MVNOs provide telecom services without owning spectrum or network infrastructure. They buy bulk talk-time and bandwidth from an operator and then sell these to users with their own branding and tariff packages. On Saturday, the Telecom Regulatory Authority of India (Trai) recommended allowing MVNOs to enter the market through a licensing framework.
According to experts, however, MVNOs in the Indian scenario will only be feasible in specific locations - rural and hilly areas - where mobile network coverage is often not of a high quality.
"MVNOs might work in niche geographies. At the moment, there is huge competition among established telecom companies and consolidation is the need of hour. Only companies with already established MVNO brands might be interested in setting up their operations in India," Hemant Joshi, a partner in the consultancy firm Deloitte Haskins & Sells LLP, said.
Once the footprint of 'Digital India' and the optical fibre network is completed by the government, there could be a market opportunity for MVNOs but not in metros or Tier-I or -II cities, he said.
Cellular Operators Association of India Director General Rajan Mathews also said it would be a tough deal for MVNOs to enter at this point of time.
"It is not a big opportunity. With so many telcos and cable operators already existing, it will be a difficult walk for MVNOs but they can definitely look at under-served areas," he said.
On Saturday, telecom regulator Trai recommended MVNOs within a licensing framework and will be allowed to offer voice, data and video services.
A separate category of unified licence be created for virtual network operators (VNOs) with an entry fee of Rs 7.5 crore on those who want to offer all services.
For those who don't want to offer all the services, the fee should range from Rs 15 lakh for national-level Internet services to Rs 1.25 crore for a long-distance telecom licence, it said. There should be no cap on the number of VNO licensees in a single service area, it said. A national telecom network operator can have as many VNO agreements as there is efficient utilisation of its network.
Customer verification and number activation shall be the responsibility of a VNO for its customers, Trai said. Its been six to seven years since the Department of Telecommunications first proposed MVNOs in the country. DoT will take a final call on MVNOs based on the recommendations of Trai.
However, according to some experts, for consumers, the introduction of MVNOs could bring cheaper mobile rates.
Tata Teleservices had earlier partnered with Virgin Mobile for an MVNO-type partnership a few years ago. But UK based firm pulled out later and the brand Virgin Mobile has been merged into Tata Docomo now. Tata Docomo also has another tie up with Future Group - Talk24 Mobile (GSM), which is not MVNO but similar to it.
Globally, Walmart - Family Mobile and Tesco - Tesco Mobile operate as MVNOs.
WRONG TIMING?
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MVNOs provide telecom services without owning spectrum or network infrastructure
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They buy bulk talk-time and bandwidth from an operator and then sell these to users with their own branding and tariff packages
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According to experts, however, MVNOs in the Indian scenario will only be feasible in specific locations - rural and hilly areas - where mobile network coverage is often not of a high quality
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A separate category of unified licence be created for virtual network operators (VNOs) with an entry fee of Rs 7.5 crore on those who want to offer all services
