India’s growing telecom market is attracting new players. But existing operators are raising questions about the entry of new players, like Virgin Mobile. A month ago, Tata Teleservices Ltd (TTSL) announced it was launching a second brand focussed on the youth segment. Virgin Mobile had lent its brand name for the purpose, it said, and TTSL would pay a royalty to Virgin for using its brand. A 50:50 joint venture company was also being formed to help in marketing of the brand, TTSL said.

Following the announcement, the Cellular Operators Association of India (COAI), a body for GSM operators, dashed off two letters to the Department of Telecommunications (DoT) stating that the arrangement between the two wasn?t a franchisee agreement but more of an MVNO (mobile virtual network operator) agreement instead. In that sense, the agreement was not legally valid since the incumbent telecom policy in the country did not permit the entry of MVNOs.

Though the DoT did eventually give its approval to the arrangement between the two companies following scrutiny, the question is: Is India ready for the MNVO concept? An MNVO, for starters, is one who does not own a network. He simply markets his product using a third-party network, that is, he uses the infrastructure and spectrum of another player to sell his brand of wireless services to prospective customers.

The concept is very popular abroad including in countries like the US, the UK and Australia. In Asia, the concept is slowly picking up in markets such as Malaysia. Worldover, however, there are some 350-360 MVNOs at this point. Virgin alone has MVNO ope- rations in the US, the UK, Canada, Australia and South Africa and is one of the more popular players in the business having begun almost a decade ago.

Some of the other known names include TracFone and Helio in the US. India, contend some, is the latest addition on Virgin?s MNVO list. But Anil Sardana, MD, TTSL, says it is not the case. ?We have clarified our point to DoT. The matter has been put to rest.? The COAI, however, remains unconvinced. ?We are not against MVNOs,? says T V Ramachandran, director general, COAI. ?Our point is there should be a transparent set of guidelines on the subject.?

Because an MVNO arrangement involves selling airtime to virtual operators by regular mobile network operators, players here, especially, GSM operators, do not seem to be too happy with it. Spectrum scarcity has been a major issue dogging industry incumbents.

Some players are of the opinion that the Tata Tele-Virgin deal is actually a backdoor entry by the latter into the Indian market. But some industry observers contend that it is time players here opened themselves to newer concepts of doing business.

With active infrastructure sharing including sharing of radio equipment, antenna, feeders and radio frequency by mobile network operators their optimal utilisation will increase. The latter can even monetise it effectively.

Says Sourabh Kaushal, industry manager, ICT practice, Frost & Sullivan, South Asia and Middle East, ?By sharing some part of their spectrum, regular mobile network operators can monetise it effectively.? Ramani Iyer, ex-managing director, Mahanagar Telephone Nigam Ltd (MTNL), says, ?Because the mobile network operator is sharing some part of his spectrum, cell sites will be smaller.?

Incidentally, recommendations on active infrastructure sharing were made by the Telecom Regulatory Authority of India (TRAI) last year. But the regulator, ?felt it was premature,? says Nipendra Misra, chairman, TRAI. But with the current debate on MVNOs raging in the industry, TRAI is all set to launch a consultation paper on the subject in a month. Recommendations on MVNOs, says Misra, will be made in about four months.

If that happens it could set the ball rolling for a change in telecom policy, a boon for ones contemplating entry through the MVNO route.