New Delhi, March 23: The government has asked the Telecom Regulatory Authority of India (Trai) to allow mobile virtual network operators (MVNO) to offer services in the country.
MVNOs are telecom companies that buy talktime from service providers at wholesale rates and sell it under their own brand. The Centre wants them to start operating by September this year.
Tata Tele recently signed a deal with the UK-based Virgin mobile, which will enable Virgin to sell Tata Teles services as a franchisee. The deal has been criticised by rival companies who find Virgin a threatening presence in an already competitive market.
The government, however, said there was little to object in the deal. The move to allow MVNOs in the country was to prevent further controversies if more foreign companies signed such deals with Indian players.
French company Orange Mobile, British Telecom, Telekom Malaysia, the US-based AT&T, Japans KDDI and Mobile ESPN are keen to enter India through the MVNO route. Sources said there had been some diplomatic lobbying to open up the market.
Indian telecom companies planning pan-India expansions are interested in becoming MVNOs as it is a cheaper and faster option to reach out to a larger customer base. Most developed countries such as the US and the UK have allowed MVNO operations.
We have sent a letter to Trai on Thursday asking it to clear MVNO services. The letter was sent under chapter 3 section 11(A), which allows regulators to advise us on the need for a new telecom service and the timing to start such a service, department of telecom (DoT) officials told The Telegraph.
Telecom ministry officials said Trai has sixty days to reply, after which the government will start work on rolling out the service. This will bring in fresh competition into the telecom space without having to release any fresh telecom spectrum, officials said.
MVNOs also invest in telecom service booster devices to improve mobile coverage even without fresh spectrum.
Officials said MVNOs often share infrastructure with telecom companies that are original spectrum holders, which brings down capital cost for both. Globally, the MVNO model has brought down mobile tariff. The cost of rolling out mobile services through the MVNO route is low for new players as they do not have to set up their own networks and can share telecom infrastructure with existing operators, the officials said. The cost of setting up a tower is around Rs 25 lakh, which comes down by a third in case of sharing.
The DoT wants to roll out services as soon as possible to cash in on Indias booming telecom market.
According to data released by Trai, the country added 8.77 million mobile phone connections in January 2008, the highest-ever recorded globally. Total number of telephone connections reached 281.62 million at the end of January.
The DoT is already preparing to launch third-generation value-added mobile services (3G) next month. The bid to start MVNO services was part of that effort, but the decision to quicken the process has been taken after the Tata-Virgin controversy. The MVNO model is rapidly growing all over the world, especially in the 3G space.