Mobile Virtual Network Operators May Be Allowed in India

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Mobile virtual network operators (MVNOs) that provide mobile phone service, but do not own radio spectrum or the infrastructure required to provide mobile telephone service, may be allowed to offer services in India soon.

The move is expected to increase competition and lower prices for Indian mobile services users, who are currently limited in their choices to a few operators that own spectrum and infrastructure.

The MVNO is a natural progression toward enhancing free market principles and contributing to the efficient use of existing telecommunications infrastructure, said the Telecom Regulatory Authority of India (TRAI) in a report to the country's department of telecommunications, which was made public on Wednesday.

The department sought TRAI's recommendations in March on the need and timing for the introduction of MVNOs, as well as the terms and conditions of the license to be granted to such operators.

MVNOs operate through commercial arrangements with licensed mobile network operators and buy bulk minutes of traffic and resell them to their own subscribers in their own brand, TRAI said.

The recommendation from TRAI will make it easier for operators like Virgin Mobile to set up direct operations in India as MVNOs.

Virgin announced earlier this year a tie-up with India's Tata Teleservices to launch services under the Virgin Mobile brand name for youth in India. Rather than set up operations in India as an MVNO, Virgin has a revenue-sharing agreement with Tata for the use of the Virgin Mobile brand.

Having MVNOs is also in line with the strategy of several operators in India to share infrastructure to cut down costs. Three large Indian operators -- Vodafone Essar, Bharti Airtel and Idea Cellular -- announced in December that they were combining passive infrastructure in a company that will offer services to operators.

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