Is the Idea of Mobile Virtual Network Operators (MVNO) too lateIJ This question has become relevant as the Telecom Commission approved MVNOs guidelines last week, nearly seven years after telecom regulator recommended that they should be allowed to offer services.
MVNOs are basically mobile telephony service operators who do not own either telecom networks or spectrum. They lease capacities of the existing telecom service providers and sell them under their own brand.
When the Telecom Regulatory Authority of India (TRAI) first recommended it, in 2008, there were only five pan-India mobile operators. Mobile penetration was comparatively low. However, mobile telephony had become a necessity so operators did not bother about consumer satisfaction. Quality of services was bad but the customers had no choice as all the operators were equally bad. The situation is similar even today. It has only worsened as call drop has spread like epidemic, especially in metros and big cities.
In developed economies such as Europe and the USA where the mobile penetration is very high compared to India and quality of services is better, MVNOs are doing well. There are more than 80 MVNOs in Germany and 60 in the UK. Similarly, the number of MVNOs in the USA is over 80.
So there is no reason to believe the argument that the Indian market has matured and there would not be many takers for MVNO business.
MVNOs basically buy bulk access to network services from the existing operators at wholesale rates. They do value addition and then sell services at their own retail prices under their own brands.
For example, in the USA one successful MVNO offers services to Hispanic population by providing low calling rates between the USA and South America. In Europe, some MVNOs target student community.
Both the European and the USA telecom markets are saturated. In Europe, MVNO are still thriving. In the USA, there are few success stories. Even in the Europe only 20 per cnt of the MVNO start ups are successful.
So what is the message for Indian marketIJ Should we agree with the cellular operators association of India (COAI) when it says that the operators do not have spectrum to spare and hence they are not excited. This may be only partially true. There will be operators who will be willing to sell their capacities at whole sale markets.
Relinace Jio, a new operator, will have excess capacity. It may not be a bad idea for it go for aggressive MVNO strategy.
There would be entrepreneurs who would come out with innovative ideas and become successful. It will be a win-win situation for both as entrepreneurs have limited financial capacities and operators are too large to service niche markets.
(The writer is a Senior Journalist)