Telecom Commission shows green light for mobile virtual network operators

Telecom Commission of India has amended telecom regulations to allow mobile virtual network operators (MVNOs), as recommended earlier by the Telecom Regulatory Authority of India (TRAI).

The move could trigger a flood of startups as several companies have expressed interest in applying for a VNO licence.

Companies, including retailers Supergroup and Shopclues.com as well as New Call Telecom, which provide instant messaging and Wi-Fi services in India, are potential candidates for VNO licence, The Economic Times reported.

Future Group already has an arrangement with Tata Telservices to give free prepaid airtime for subscribers with shopping. An MVNO venture would help the retailer expand its mobile operations.

According to the report, e-commerce website Paytm, which offers online credit recharges for India's mobile operators, is another potential candidate for a VNO licence.

MVNOs are a kind of network operators that are virtual in nature. They do not possess airwaves for providing telecom services on their own, but provide voice and data services after buying them at a wholesale rate from existing telecom operators.

However, a 14 per cent licence fee and the spectrum usage charges could be a deterrent to growth of VNOIs in the country, according to Rajan Mathews, director-general of GSM industry body COAI.

Also, the success of the VNO model is yet to be proved as there are no popular models in emerging markets with lower teledensity, unlike in the mature markets where the teledensity is quite high.

Also, Indian operators do not have the excess capacity to take on VNOs and their own brands are very strong, he noted.

At the same time, as VNOs indirectly sell the services of their partner telecom operators under their own brand to the subscribers, such an arrangement could also be a win-win situation for both the parties.

Telecom operators find new form of customers (in the form of MVNOs) for their services, while MVNOs provide high-value services (by combining various packs) to their subscribers. MVNOs not only share the operational expenses of the telcos, but can also help offset their marketing and sales cost as they offer their services under their brand name.

VNO will be able to offer all telecom services provided by a telecom operator with which it has partnered. It can sell services of more than one operator.

The proposal is yet to be approved by the telecom minister and once the process is over new unified licences will be issued and implemented within a few weeks, says the report.