Date:07/08/2008 URL: http://www.thehindu.com/2008/08/07/stories/2008080755351900.htm

Business

TRAI clears entry of mobile virtual network operators

Special Correspondent

The FDI limit will be 74 per cent

MVNOs cannot participate in spectrum auction
No roll-out obligation for MVNOs

NEW DELHI: The Telecom Regulatory Authority of India (TRAI) on Wednesday cleared the entry of ‘mobile virtual network operators’ (MVNOs) in the Indian telecom market and recommended their introduction as ‘distinct service providers with its own licensing and regulatory framework.’

“MVNO is a licensee in any service area that does not have spectrum of its own for access service, but can provide wireless (mobile) access services to its own customers through an agreement with the licensed access provider (mobile operators),” says TRAI’s definition of an MVNO.

Stating that MVNOs would contribute to the efficient use of existing telecommunication infrastructure, TRAI said MVNOs cannot participate in spectrum auction for access services in their service areas, as they cannot have their own spectrum. Similarly, ISPs can become MVNOs if they do not have spectrum for wireless broadband services.

In its recommendations to the Department of Telecommunications (DoT), TRAI has said that MVNOs should be issued a licence under the Indian Telegraph Act.

“Any Indian company having a net worth of Rs. 10 crore for Metro and category ‘A’ telecom circles, Rs. 5 crore for category ‘B’ and Rs. 3 crore for category ‘C’ service area, and with paid-up capital of 10 per cent of prescribed net worth and satisfying licence conditions like foreign direct investment (FDI) and substantial equity would be eligible to apply for MVNO licence,” it said.

TRAI has further recommended that there would be no roll-out obligation for MVNOs and the FDI limit would be 74 per cent, which is same as a Mobile Network Operator (MNO).

The arrangement/agreement between MNO and MVNO would be driven by market forces and therefore no regulatory diktat is required and there is no limit on the number of MVNOs attached to an MNO. But the agreement with MNO has to be submitted before issuance of license to MVNO by DoT. Also, it is the MNO who would pay charges for utilisation of spectrum by the MVNO.