India - MVNOs

Virtual mobile networks set to enter India

Mobile users can expect a sharp fall in tariffs and access to a range of sophisticated services if the government accepts recommendations by the Telecom Regulatory Authority of India to permit mobile virtual network operators.

MVNOs do not own spectrum, the radio frequencies that enable wireless communications, but can provide mobile services by leasing or buying capacity from mobile licensees.

The move is expected to bring in a bevy of new international and Indian players in the mobile space that could drive down tariffs even more.

Reliance Communications [Get Quote], for instance, has held preliminary talks with France Telecom to offer Orange MVNO services in India. With RCom rolling out a pan-Indian GSM network, it is expected to have sufficient surplus capacity to lease out to MVNO operators.

Subhash Chandra's Essel group might be first off the block. "Now with the policy we will explore an association with service providers and handset manufacturers," said Ishwar Jha, CEO, Digital Media Convergence, a part of the Essel group.

Sources said the Essel group is in talks with BSNL to offer an MVNO service that will offer entertainment information on the mobile.

Broadcasting companies like ESPN, Star TV, Disney and MTV, which have a presence in the MVNO space globally offering niche services, might tap the opportunity in India too.

"TRAI's recommendations open a whole new opportunity to offer differentiated services and options for Indian consumers," said Viren Popli, senior vice-president, Star Mobile Entertainment.

Virgin Mobile, the world's largest MVNO, already offers youth-targeted services through a marketing tie-up with a Tata group company and is expected to convert itself into an MVNO once the policy is approved. The company declined to comment

Earlier this year, the tie-up came under attack from GSM operators who alleged that Virgin was making a backdoor entry into the country when MVNO policy was not in place.

Incumbent operators, however, are sceptical about the entrance of MVNO. "This model was successful abroad mainly because there were two or three players and the average revenue per user was high, so they could still make margins," said T V Ramachandran, Director General, Cellular Operators Association of India.

"But operators like Bharti Airtel, Vodafone and Idea Cellular will undercut MVNOs' business," he added.

Ramachandran also doubted whether players will have surplus capacity to lease.