R.K. Upadhyay, Director General, VNOAI
Mobile virtual network operators (MVNOs) continue to present a major opportunity that has not yet been fully harnessed in India. The Department of Telecommunications (DoT) announced its virtual network operator (VNO) licence policy in May 2016, following the release of the Telecom Regulatory Authority of India’s (TRAI) VNO recommendations in 2015. Since then, DoT has issued more than 125 VNO licences. However, only three unified service access or MVNO licences have been issued, of which only two are national players with global MVNO business major Plintron’s Indian subsidiary Plintron India being the first national VNO unified licence holder.
The lack of operational MVNO players has been due to the erstwhile VNO licensing regulations coupled with poor finances of private mobile network operators (MNOs), leading to consolidation and shutting down of most MNOs. Private MNOs are not interested in opening up to MVNOs as they fear it will create competition and only state-owned Bharat Sanchar Nigam Limited (BSNL) has a concrete MVNO policy.
MVNOs are the need of the hour in India and will provide the much-needed competition, ensuring that private MNOs improve services and provide equitable tariffs. MVNOs empower brands to offer an extension of mobile services to increase customer loyalty and engagement apart from adding an additional revenue stream. Banking and telecom have converged, so we may expect banks to set up MVNOs. Energy and gas utilities also may offer MVNO services to provide converged services with “connected home” apps. Broadband companies also may use the MVNO route to diversify and offer mobile services.
Segment-focused MVNOs also provide differentiated offerings based on specific use cases. For example, data-focused or machine-to-machine MVNOs can cater to specific IoT use cases like telemetry, which due to low ARPU and high volumes do not attract MNO attention.
MVNOs are actually a boon for MNOs and increase their wholesale requirements, helping recover the network capex investments of MNOs and also making the 5G business case of private MNOs more viable. MVNOs will help MNOs maximise penetration in niche segments. Also, to address the apprehension of private MNOs, MVNOs will not typically follow a discounting strategy given the existing legacy in India, but will offer fair tariffs that provide value to the customer. They will focus on tariff customisation, high customer support and differentiated offers. We may expect to see branded reseller MVNOs, supermarket MVNOs, utility MVNOs, ethnic and affinity group MVNO models succeed in India. Such niche segments have been hitherto unexplored by MNOs.
The launch of 5G will allow network slicing, enabling MVNOs to cater to specific use cases for their customers. For example, a low latency high speed use case can be used by OTTs/OSVs to launch their own video streaming-focused MVNOs. Hence, MVNOs will complement MNOs in their 5G business as well.
The revival of the VNO business requires the regulators and licensor’s DoT intervention in the current 3+1 Indian telecom market with limited competition. Urgent licensing and financial reforms are needed to ensure that the Indian MVNO industry can take off. The most important is to ensure that the incumbent MNOs are obliged to give access to MVNOs.
It is thus essential for the regulator and the licensor to make it mandatory for incumbent MNOs to provide access to MVNOs. Also, the concept of AGR for MVNOs should be done away with as MVNOs do not get any separate spectrum allocation. The regulator should also prescribe model commercials for governing the relationship between MNOs and MVNOs. The licence period of MVNOs should also be increased to 30 years given their unique business model, in line with the recent 2021 telecom reforms in India. All the financial conditions prescribed to UL-VNO licensees need to be reformed and only a token administrative fee of 1 per cent be charged as UL-VNOs/MVNOs are based on the reseller model and do not own any spectrum. TRAI had recommended in August 2021 that the terms and conditions offered to different VNOs be fair, transparent and non-discriminatory, and MNOs declare their reference offer (including commercials) on their website. MNOs will offer wholesales services to all VNOs including those promoted by itself in a transparent, fair and non-discriminatory manner. Also, the submission and processing of the application from VNOs should be governed by a web-based online portal interface provided by the MNO.
We already have a good MVNO facilitator ecosystem in India with the presence of mobile virtual network aggregators (MVNAs) that provide a complete end-to-end package including wholesale airtime apart from the entire SaaS stack (BSS, OSS, NSS) to aspiring MVNOs, thus enabling a quick service launch. We have an Indian presence of MVNAs like Plintron, which has launched more than 140 MVNOs globally. Given the right support by the regulator and the licensor, MVNOs will provide a much-needed fresh breath in terms of competition and differentiated services in India.