Indian regulator backs introduction of MVNOs

Move could pave the way for foreign players to enter Indian mobile market, although TRAI insists FDI cap remains at 74%.

The Telecom Regulatory Authority of India (TRAI) has released its recommendations for the introduction of virtual mobile players into the Indian market.
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In response to a request from the Department of Telecommunications (DoT), the TRAI undertook a public consultation and on Wednesday announced that, subject to a number of conditions, it is in favour of mobile virtual network operators (MVNOs).

The current ban on MVNOs has been under discussion for some time, with companies such as MVNO pioneer Virgin Mobile pushing for the right to offer services in India.

But, should its recommendations be accepted by the government, the regulator does not plan to make it easy for foreign players to launch services.

The TRAI has stipulated that operating as an MVNO will be subject to acquiring a licence, a process that is open to Indian companies only. Furthermore, as for mobile network operators, foreign direct ownership of MVNO licensees is restricted to 74%.

Nonetheless, there will doubtless be many companies interested in providing mobile services in India, a rapidly growing market that is adding around 8 million new subscribers per month with significant room for further growth.

The government previously revealed that it has been approached by a number of players seeking to become Indian MVNOs, and various press reports over the past six months have named major global telecoms operators, including AT&T, Etisalat and Orascom, as on the hunt for deals with local players that would enable them to enter the market.

Earlier this year Virgin Mobile announced it had brokered a partnership deal with Tata Teleservices to enable to offer a Virgin-branded services in the country. However, doubtless mindful of the ban on MVNOs, Virgin highlighted the fact that it would not be operating as a virtual service provider, but rather Tata would sell Virgin-branded mobile services as part of a revenue-share agreement.

If the situation in mature markets is anything to go by, the arrival of MVNOs in India would serve to push down already extremely low call rates.

“The introduction of MVNO[s] is seen as a natural progression towards enhancing free market principles and contributing to the efficient use of existing telecommunications infrastructure,” the TRAI said in a statement.

The regulator defined an MVNO as an operator “that does not have spectrum of its own”, but in its guidelines noted that MVNOs should be free to operate either simply as a brand, i.e. with no infrastructure, or as a full MVNO, with the ability to set up its own HLR, VLR, switches, MSCs and so on.

It also specified that MVNOs could run services using the spectrum belonging to 2G, 3G or broadband wireless access licensees.