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MVNO services in India

 DEA, Investment Commission Recommends "Mobile Virtual Network Operator" Mode


ICHARD Branson-owned Virgin Telecom's plan of launching mobile services in India via the mobile virtual network operator (MVNO) may finally take off. This is because the department of economic affairs and the investment commission, headed by Ratan Tata, have recommended that MVNO be permitted among the new services that telecom companies can provide.


The MVNO service, which is currently being offered in the European and the US

markets, offers telecom services without owning a network infrastructure or spectrum. It involves a marketing and branding outfit which buys airtime from an existing mobile service provider that owns equipment and licence rights for these services. This model has been complemented to having brought down rates by increasing competition in high-price markets.


“MVNOs typically add value such as brand appeal, distribution channels and offer affinities such as m-commerce and banking. The MVNOs may have sufficient agreements with more than one existing operators to provide good coverage and service. Independent MVNOs can offer a product mix that incumbent mobile operators cannot match,” said that investment commission note to the DoT. The note is also endorsed by the department of economic affairs.


"Telecom is not only a sector in itself but also very useful infrastructure to provide

and perform other business. So we may make suitable amendment in licensing condition to permit resale of services,” the note added.


Earlier this year, the DoT had dashed Branson's hopes to enter the telecom space in India through the MVNO route by stating that it was against allowing companies to start such services here as "this would only increase the infrastructure crunch in the mobile sector.”


The move to allow MVNOs is expected to see numerous other international players enter the third generation (3G) mobile space in India, after spectrum for these services are made available.


DoT is however opposed to the entry of MVNOs on the ground that the country's

mobile tariffs were already among the lowest in the world. Besides, as India had a tele-den-sity of mere 13 %, the country needed facility-based telecom service providers rather than virtual operators, DoT officials said.