Late nod to VNO could mean virtually no offers

By: | Published: March 29, 2016 1:34 AM

The Telecom Commission on Monday decided to allow virtual network operators. This means any player with marketing abilities but sans...

In allowing VNOs, the commission has accepted the Telecom Regulatory Authority of India’s suggestions. It would have been a game changer had it come some years ago when it was first talked of. In allowing VNOs, the commission has accepted the Telecom Regulatory Authority of India’s suggestions. It would have been a game changer had it come some years ago when it was first talked of.

The Telecom Commission on Monday decided to allow virtual network operators. This means any player with marketing abilities but sans a licence to provide mobile or landline services can buy airtime in bulk from licensed operators and retail it to customers like mobile operators do.

In allowing VNOs, the commission has accepted the Telecom Regulatory Authority of India’s suggestions. It would have been a game changer had it come some years ago when it was first talked of.

However, at the current stage there’s hardly going to be many takers for it. But there might be some scope for the state-owned, loss-making BSNL to scout for some VNOs to market its services.

In the case of VNOs, though the network and spectrum belong to the licensed operator, the former becomes the interface with the customers and also pays licence fee, etc.

The reason why there won’t be many takers for the VNO model in the private sector is that they are in a consolidation mode and already trading their spectrum with a bigger player or in merger talks with some in certain cases.

Some years ago, Tata Teleservices entered into a pact with Tata DoCoMo which was very similar to the VNO model. However, since at that time VNO was not allowed, only the marketing part was done by DoCoMo while billing, licence payment, etc, was done by Tata Teleservices. This arrangement eventually failed.

With regard to the spectrum pricing for the 700, 800, 900, 1800, 2100 and 2300 MHz bands, the Telecom Commission has decided to seek certain queries from Trai on its recommendations. Its basic query is the rational for Trai to recommend the price of the 700 MHz band at four times that of the 1800 MHz band. It also wants to know whether it makes sense to auction all of 700 MHz at this stage when the ecosystem for the band is yet to be developed. Trai had suggested that all of it be auctioned.

Trai needs to respond to the commission’s queries within 15 days of receiving it. It can either concur with the commission or stand by its recommendations. After this process, the TC is free to go ahead with what it deems best as Trai recommendations in the policy areas are not binding on it. Trai has recommended a record high base price of Rs 11,485 crore per MHz for the 700 MHz band.

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