Are we Ready for Mobile Virtual Networks?

by Sonal Desai    Feb 14, 2007

Is India ready for Mobile Virtual Network Operators (MVNOs)? Should we, or should we not, allow MVNOs to establish base here? If allowed to enter, will they enhance end user experience?

According to a definition posted on Wikipedia, MVNO is a company that does not own licensed frequency spectrum, but resells wireless services under its own brand name, using the network of another mobile phone operator. It works independently of the operator and can set its own pricing structures. It appears as a roaming partner.

Even as the Telecom Regulatory Authority of India is getting suggestions from telecom operators on whether the time is ripe to initiate MVNO process here, the issue is being hotly debated at all possible Congresses and seminars that have telecom as their theme. TRAI has recommended that MVNOs be allowed in India.

Vinod Nair, Managing director, Diamond Consultants, a technology and management consulting firm is of view that the degree of mobile penetration and degree of competition will determine the entry of MVNOs here.

The service providers also are not exactly against the entry of MVNOs. Reliance Communications Limited(RCL) in its suggestion to TRAI maintains that MVNOs do not have a license to use radio spectrum, but have access to one or more of the radio elements of a mobile operator and are able to offer services to subscribers using such elements.

The company believes due to limitation of radio spectrum, only a limited number of facility-based operators will be able to function in the market. Since radio spectrum in a way is a bottleneck facility, further competition can only be introduced through MVNOs. “We therefore believe that Cellular Mobile Telephone Service (CMTS) should be required to allow MVNOs to access capacity on the cellular operator’s core networks. MVNOs stimulate competition and innovation in the mobile industry. Elements required to facilitate MVNOs are the ability of cellular operator to sell access to their network and airtime to an MVNO. The MVNO must then be permitted to re-package, re-brand and re-price those core network elements to create new product offerings for its customers.”

VSNL suggests that: network operators be permitted to enter into wholesale supply agreements with MVNO at mutually acceptable terms, an appropriate framework is developed to regulate functioning.

Association of Unified Telecom Service Providers of India (AUSPI) is of the view that it should be left as franchisee model to access service providers as permitted under the license agreement of Unified Access Service Providers.

Sanjiv Mital, CEO Bharati Telesoft opines it’s a natural reaction for a player in any market not to welcome a new market player - the immediate implication is a reduction in market share and revenues.

“The experience in other markets suggests that the MVNO does not necessarily erode existing players’ market share and profitability. They buy network capacity from existing operators, thereby generating more revenues.” Also, where MVNOs have tended to be successful, there has been a clear ‘gap’ or ‘value add’, be it new channels to market (e.g. Tesco in the UK), or a strong brand able to stretch into the mobile category, such as Virgin in Australia and South Africa.”

Sunil Kand, Head, NGN Services, at Wipro Technologies acknowledges, that with proper strategies, MVNOs would be able to translate more profitability during non peak hours by innovative pricing and features. If they are able to draw more ARPUs than the incumbent service providers from whom they have leased bandwidth, it will be a win-win situation for both.

Few conditions such as excess bandwidth and spectrum availability with service providers to be let out to MVNOs, freedom to a MVNO to choose a NLD of choice, regulatory framework to allow such a service and the incumbant’s network/infrastructure readiness to accommodate MVNO will be vital.