Global telcos eye ‘virtual route’ for Indian mobile foray

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With acquiring a new telecom licence in the country becoming a daunting task, global telecom majors including BT (formerly British Telecom), Verizon and France Telecom have approached the telecom regulator to open up the mobile market for the entry of Mobile Virtual Network Operators (MVNO). MVNOs are a category of service providers who take bandwidth and infrastructure on wholesale from existing mobile operators and then resell it in the market with their own branding and tariff plans. With more than 300 applications for a new telecom licence awaiting clearance from the Department of Telecom, chances of these global players entering the fastest growing mobile market appears slim unless they acquire or decide to bid for 3G spectrum whenever the policy is announced.

Infrastructure-free
Through the MVNO route, these telecom companies will be able to foray into the mobile space without owning any infrastructure or spectrum or even waiting for a licence.
Virgin Mobile’s recent partnership with Tata Teleservices, though stops short of being an MVNO, will also evolve into one once it is made legal.
Pushing its case to allow MVNOs in India, BT, in a letter to TRAI, said, “MVNO is seen as a natural progression towards enhancing free market principles and contributing to the efficient use of existing telecommunication infrastructure. MVNO will not only provide customer with wider bouquet of services and value-added service, it will also serve to introduce greater competition, which should in turn bring down the telecom prices.
It will bring in global telecom operators wanting to enter India, many of whom have already operated in the MVNO model successfully to share their expertise.”

Irrelevant to India
However, some of the existing mobile players, including Bharti Airtel, Reliance Communications and BSNL have taken a stand that MVNOs may be irrelevant to the Indian market. “Tariffs in India are amongst the lowest in the world, the market penetration is only 25 per cent, and all the service providers are aggressively rolling out their networks to enhance penetration in rural areas. Under these circumstances, the concept of MVNO seems to be premature at this point of time,” Bharti Airtel said. They have also suggested imposing licence fee and roll-out obligations on MVNOs if the Government permits it.
Opposition from existing players could wilt the global telcos’ strategy because they may find it difficult to find an operator who would be willing to share infrastructure. To overcome this problem, multinational companies have sought TRAI’s intervention.
What may work for the global players is the presence of operators who are not in the top 4 in terms of market share and are willing to lease out their infrastructure. Existing operators such as Tata Teleservices and Spice Communications are in favour of permitting MVNOs.

The Hindu Business Line : Global telcos eye ‘virtual route’ for Indian mobile foray

 

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Trai MVNO definition comes under fire
Bharti Airtel Ltd and Reliance Communication (RComm) have opposed the Telecom Regulatory Authority of India definition of a mobile virtual network operation—which entails the “sharing of spectrum” between a mobile network operator and a mobile virtual network operator (MVNO)—and have asked for a review. In separate communications to Trai, the country’s largest and second-largest mobile network operators have opposed its definition, claiming that such a ‘sharing’ of spectrum implies ownership or co-ownership, which cannot be true in the case of MVNOs, as that would amount to spectrum trading, currently disallowed in India.
An MVNO with spectrum would no longer be a virtual network operator, but a facility-based mobile network operator, making it indistinguishable from a unified access service provider, the two domestic telecom majors have argued. Only infrastructure sharing is allowed under existing norms. Internationally, mobile virtual network definitions typically do not mention spectrum sharing and both Bharti and RComm have asked the regulator to clearly specify that an MVNO does not have its own spectrum.
In their representation, Bharti and RComm have stated that MVNOs were successful in that have only a few players and where average revenues per user were on the high side. In India, however, the industry is extremely competitive, with 12-14 players in each circle, and tariffs are among the lowest in world. As such, MVNOs aren’t really the need of the hour, the two operators contend.
Citing the fact that MVNOs do not make investments in telecom infrastructure, RComm has said that by allowing them into the country without making such investments in infrastructure but virtually providing similar services, may prove to be a disincentive for existing operators. Bharti, in its communication to the regulatory authority, has asked Trai to allow MVNOs only to offer basic services until the market matures, after which other forms of MVNOs could be allowed.
The so-called ‘thin model’ would not require an MVNO to have any infrastructure and would allow it to piggyback an existing mobile network operator on mutually agreed terms, while letting the MVNO brand its own product.

Trai MVNO definition comes under fire

 

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TRAI may not permit spectrum sharing
The Telecom Regulatory Authority of India (TRAI) may decide against allowing telecom players to share spectrum. This may come as a blow to companies which want to foray into the Indian mobile sector as mobile virtual network operator (MVNO).

Multinational telecom players including BT, France Telecom and Verizon had pushed for spectrum sharing in a bid to make the MVNO business more attractive.

MVNOs are a category of service providers who take bandwidth and infrastructure on wholesale from existing mobile operators and then resell it in the market with their own branding and tariff plans.

Guidelines process

TRAI is in the process of formulating guidelines for allowing MVNOs in the country and held an open house on Monday to discuss various issues. While MVNOs may be allowed to share mobile network infrastructure such as tower, radio base stations and also buy airtime from existing players, without ownership of spectrum they will be totally dependent on licenced operators.

While global telecom players wanted TRAI to permit spectrum sharing, most of the Indian operators including Bharti Airtel, Reliance Communication and BSNL are against the move. Indian operators argue that spectrum is as it is a scarce resource and, therefore, there was not much scope to share it with anyone else.

However, those in favour of sharing of spectrum said that it would allow optimum utilisation of radio frequency, especially in rural areas where most existing mobile operators have excess bandwidth.

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‘Enough frequencies’

“Spectrum is probably scarce in about 20 cities but in other parts of the country, there are enough excess radio frequencies that can be shared. It will also allow operators to optimally utilise their spectrum and earn more revenues. For instance, at night time most of the networks are idle. If an MVNO is allowed to hire capacity and offer special night calling packages, then it will benefit consumers”, said an MNC telecom player.
Orange Business Services, a division of France Telecom, said, “India is already a mature market and taking into consideration the telecom target of 500 million connections by 2010 set by Government, we feel it’s the right time for the introduction of MVNO in India. At the same time, there should not be high entry barriers which will act as deterrents for new players from being a party to the MVNO”.

TRAI may not permit spectrum sharing - Sify.com