R.K. Upadhyay, Director General, VNOAI

India has experienced a latent demand for mobile virtual network operator (MVNO) licences since the first decade of this century. Even before an MVNO policy was announced, international MVNO major, Virgin Mobile, launched its brand in India under a franchising agreement with Tata Teleservices in 2008. The Future Group followed suit. It signed a similar franchising agreement with Tata, with the launch of T24, in 2010. However, these agreements did not succeed due to the lack of MVNO regulations and the prevailing mobile scenario in India.

It was in 2008 that the Telecom Regulatory Authority of India (TRAI) issued its first MVNO policy recommendations, followed by fresh recommendations in 2015. Thereafter, in May 2016, the Department of Telecommunications (DoT) announced its VNO licence policy. Since then, DoT has issued 125 VNO licences as of March 2021, of which 120 are for mobile (access) services.

However, due to some VNO licensing regulations, coupled with the existing conditions in the mobile industry, such as consolidation and the shutting down of services by mobile network operators (MNOS), the MVNO sector has not really taken off.

There were only 101,058 subscribers till April 2021 with very few MVNOs actually operational. Only one national-level VNO mobile access unified licence (UL) has been issued, to Plintron India. Most private MNOs have been preoccupied with their finances and hence, have not been able to focus on an MVNO strategy. Only state-owned Bharat Sanchar Nigam Limited (BSNL) has rolled out MVNOs.

MVNOs typically offer differentiation and customised services and tariffs, as they usually focus on niche segments such as affinity groups, sporting clubs, and linguistic, religious and cultural groups by offering customisations including closed user group (CUG) tariffs and value-added services (VAS) such as music, videos and games. Large enterprises can also set up their own MVNO catering to employees and partners. For instance, we may expect banks to set up MVNOs, utilities may offer MVNO services as converged services with customised “connected home” apps, and broadband companies may take the MVNO route to offer mobile services.

Multiple MVNO brands that know their individual segments will help MNOs maximise penetration into such under-catered segments. However, the discount MVNO model is unlikely to succeed given the low tariff levels. Hence, focus will be on tariff customisation, high customer support and differentiated offers. We may see branded reseller MVNOs, supermarket MVNOs, utility MVNOs, and ethnic and affinity group MVNO models succeed. Such niche segments are hitherto unexplored by MNOs.

Segment-focused MVNOs also provide differentiated offerings based on specific use cases. For example, machine-to-machine (M2M) MVNOs can cater to specific internet of things use cases such as low power wide area (LPWA) for telemetry. Likewise, over-the-top (OTT) players can launch their own MVNOs or specific media-focused MVNOs can tie up with OTT players. These are a few sectors where MVNOs are expected to prosper in India especially with the launch of 5G, which allows network slicing, enabling MVNOs to cater to specific use cases for their customers. The emergence of e-SIMs can also be used by MVNOs to provide international roaming at visiting country rates.

Net, net, MVNOs are a very important requirement in today’s scenario in India. They will immediately help the finances of ailing MNOs, which spend heavily on advertising and subscriber acquisition/retention. As MVNOs do their individual marketing and have their own sales channel and customer care, they can enable huge savings in subscriber acquisition and retention costs for fund-starved MNOs. Further, MVNOs will act as business partners of MNOs, flank them against competitive offers and churn, and add to their wholesale revenues besides freeing up funds for much-needed network up-gradation including for 5G. Given the infrastructure, MVNOs can focus on Tier 3 cities and rural areas as well.

MVNOs will also improve competition in a market that has only five MNOs left compared to 15 a decade back. Hence, MVNOs are the panacea for the ailments faced by today’s mobile ecosystem and will contribute to its growth. However, MNOs need to focus on the MVNO segment and offer stable quality of service (QoS) and competitive rates with a bulk discounts based on revenues generated by the MVNO. The regulator also needs to mandate that non-discriminatory QoS and a certain percentage of wholesale revenues come from independent MVNOs like in countries such as Austria and Germany. Also, the licensing revenue share and bank guarantees need to be reviewed by DoT. Given the right support from regulators and MNOs, the future seems bright for Indian MVNOs as they will rejuvenate the current mobile ecosystem and save it from becoming a duopoly.