Virgin Mobile Launch Hits Regulatory Hurdle; Why Are MVNOs Not Allowed In India?
This just in: Virgin Mobile’s (NYSE: VM) launch has hit a regulatory hurdle, reports CNBC-TV18. It seems that the Department of Telecom has issued a notice to Virgin’s JV partner Tata Teleservices, asking for details on the terms of the agreement between the two companies, to check whether Virgin Mobile India is an MVNO or not. Virgin has been asked not to launch services before getting a clearance from the DoT. Yesterday, CNBC-TV18 had reported that following objections from the COAI, Telecom Secretary S Behura has asked the licencing department to vet the JV.
On the face of it, Virgin Mobile India does appear to be an MVNO: the company hasn’t been allocated spectrum, and yet it uses a mobile operators pipe to deliver voice and value-added-services. They’ve also stated that both Virgin is free to partner with other mobile operators. However, this is likely to boil down to technicalities - on how exactly an MVNO is defined under Indian law, and how the deal between Tata Teleservices and Virgin Mobile has been structured. I wouldn’t be surprised if the deal structured to be within the law, and yet conforms to the above definition of an MVNO. Bear in mind that the billing here is being done by Tata Teleservices, and they’re not paying Virgin as per minutes of use, but reportedly, a fixed amount each time a consumer buys a service.
I think there’s also a larger issue also in play here - why exactly are MVNOs not allowed in India? If a mobile operator wants to allocate a part of his pipe or spectrum to a company that can manage services better - why not? It’s probably due to the spectrum crunch that India faces in certain circles, particularly the high-density, high ARPU, metro cities that the MVNO is likely to target. And with more telecom operators entering the frey, the government will be hard pressed to allocate spectrum to them. Still, I think the launch of Virgin augurs well for a country where value-added-services has been put on the back-burner by most mobile operators, particularly Airtel. It might just show operators the value of letting the professionals handle the content.
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Comments (3)
Mar 8, 2008 6:31 AM
TRAI/DoT/TEC needs to be very clear on MVNO definition. If it is defined as “only those entities who own spectrum and/or network can run mobile phone services in India.” This would keep out any entity be it Indian or foreign entering into this space.
Virgin Mobile, for sure, is an MVNO. The arrangement is they use TTSL spectrum/network to provide mobile phone services. The buz model can be anything. This arrangement is very typical of an MVNO - nothing more.
Though bit out of context, there is a vehement/vociferous opposition to Virgin brand in India - be it mobile phone services or the airlines.
Mar 8, 2008 6:47 AM
There is an interesting angle to what Mr.GopalKrishna says. I think TRAI/DoT/TEC or even COAI may NOT have thought of whether an incumbent can take a “franchise” of any national or international brand to launch a separate mobile phone service.” In this case, TTSL is “franchising” Virgin Mobile brand and paying a fixed royalty per connection to Virgin Mobile. Well, this is on paper…..
In this case, TTSL should drive business and NOT Virgin Mobile. But what’s happening in India is the opposite. To me its “outsmarting” the restrictive telecom policy - authorities and operators.
Who knows, taking cue, Kingfisher/jet airways/sony/mtv/zee/star/indian railways might launch mobile phone service riding on any incumbent operator’s network.
any thoughts??
Mar 17, 2008 7:13 AM
its the governments wish whom to select….