India to Allow Mobile Virtual Network Operators?

The Telecom Regulatory Authority of India (TRAI) has recommended that mobile virtual network operators (MVNOs) be made lawful in India. Many would note that would add yet more competitiion to what some would say is the most competitive mobile market in Asia.

The recommendation goes to the Department of Telecommunications, which makes the final decision. If approved, the new rules could enable market entry by new providers in the communications business, such as cable TV operators or big brands with other assets (customers, widely used apps, distribution networks).

TRAI has recommended 10-year periods for the licenses, which could be reviewed after three to four years.

MVNOs would be required to pay government license fees and spectrum usage charges (a percentage of gross revenue) at the same rates as paid by telecom operators.

Up to this point, some marketing and branding efforts somewhat similar to an MVNO business model have been tried in India, largely without success.

And some observers might note that competition in India is not lacking. But new MVNO enabling rules would allow other firms not in the mobile business to become mobile service providers. Well-known brands are possible new contenders, especially in the largest urban markets where available infrastructure and the chance to create niche products is greatest.

Some observers might suggest India mobile markets are so competitive there is no room for additional retailers. That might be quite correct for standard prepaid mobile services. But in other countries, MVNOs based on language, for example, have proven successful. That could well be the case in the Indian mobile market.

Also, the MVNO route would allow other communications service providers and big brands to enter the market at lower cost than otherwise would be possible, leasing instead of building new facilities.