In a move that will trigger competition in the world’s fastest-growing mobile phone market, the Telecom Regulatory Authority of India (TRAI) has asked the government to allow mobile virtual network operators (MVNOs), whose business model involves buying airtime from existing operators and then selling it under their own brand, to launch services in India.
This will enable firms to offer mobile services without owning cellular networks (radio frequencies).
Companies such as the UK’s Virgin Mobile and BT Mobile and Japan’s KDDI have based their strategies on the MVNO model.
At present, there are 360 MVNOs operating globally. TRAI has recommended that the entry fee for MVNOs should not be more than Rs 5 crore for metro/category A, Rs 3 crore for category B and Rs 1 crore for category C service areas.
Thus, an MVNO will have to pay a maximum of Rs 75 crore for launching nationwide services compared to the Rs 1,651-crore entry fee paid by an operator who sets up physical network throughout the country.
TRAI’s recommendations, which stand a good chance of being accepted by the government, will have major implications.