Department of telecom clears Tata-Virgin deal

In what may be termed a blow to the lobbying by the Cellular Operators Association of India (COAI), the department of telecommunications (DoT) today green lighted the entry of sir Richard Branson's Virgin Mobile in the country in a tie up with Tata Teleservices.

The COAI had earlier argued that Virgin Mobile, part of the UK-based Branson's Virgin Group, had violated India's telecom norms by entering the country as a mobile virtual network operator (MVNO).

A MVNO does not maintain its own network and instead has contracts to use the existing networks of other providers on which it offers services by buying bulk airtime from mobile operators and reselling it as a packaged plan under its own branding.

Currently MVNOs are not yet permitted in India, though telecom regulator Telecom Regulatory Authority of India (TRAI) has recommended that they be allowed. As a result, Virgin Mobile, which is the world's first MVNO, introduced its services in India as a franchisee of Tata Teleservices. The company has a similar arrangement with cellular operator Cell C in South Africa.

However, COAI argued that the arrangement in India was the other way round, where Tata Teleservices was operating as the franchisee under the Virgin brand. Tata Teleservices successfully argued before the telecommunications ministry that it had no partnership for use of network or spectrum with Virgin and the tie-up was purely for non-license activities, and hence was in complete accordance with the laws of the land.

DoT said in its statement "The Virgin Mobile brand tariff plan completely belongs to Tata Teleservices / TTML and it is subject to the regulatory process and has been filed by Tata Teleservices / TTML with TRAI. All customers, tariff plan and the revenue belong to Tata Teleservices / TTML. "

Virgin Mobile had recently created a stir with its innovative, youth-centric advertising campaign, as well as introducing a scheme where a subscriber would be paid in talk time for incoming calls. The company also proposes to introduce handsets with password-locked SMS facility to prevent inquisitive parents from viewing the contents of their children's mobiles.

In India, the Virgin Group has a technical and consultancy services agreement with Essar Telecom Retail, the retail venture of the Ruias. Under this agreement, the Virgin group is providing its expertise in the areas of branding, marketing, customer care, store operations and staff training to Essar stores.