NEW DELHI: Kishore Biyani–led Future Group and tablet maker DataWind say the telecom regulator’s proposal to have district-level virtual networks is executable as there is adequate demand in the market amid the ongoing consolidation in the telecom industry.
Future Group has applied for a nationwide mobile virtual network operator (MVNO) permit for its brand T24, and has teamed up with Tata Teleservices for offering services.
“India is all about regions and there are regional players in everything (segment) in the country, so there’s no reason something can’t happen regionally,” Biyani, CEO of Future Group, told ET.
“For instance, data services can also be offered at a regional level.” The view is backed by DataWind’s CEO Suneet Tuli. “For any brand that wants to provide telecom services without spending lots of money on infrastructure, network, etc., the MVNO (route) is the only way and, therefore, there will be appetite in the market for smaller players to enter,” said Tuli.
The Telecom Regulatory Authority of India (Trai) has asked stakeholders if a new category—unified licence (UL) VNO category-B licensee— should be created under access service authorisation allowing a combination of wireline voice and internet (broadband) services, or even wireless services, with districts of a state as service areas.
Trai has also sought industry feedback on whether licensees can team up with more than one operator for providing voice and internet services through wireline networks. Larger telcos, however, are skeptical whether virtual network operators (VNOs) can actually offer more to consumers or have a sustainable business model in a fiercely competitive market where existing players are engaged in an escalating tariff war, regardless of acute financial stress.
For instance, Rajan Mathews, director-general of the Cellular Operators Association of India, which represents telecom biggies including Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm, is of the view that Trai’s proposed model may not have enough legs to run on, as there are technical as well as financial challenges involved.
“With such a financially stressed industry where the big guys can’t afford to do things, whether MVNOs will be able to flourish is good question,” Mathews said. VNOs, he said, would also have to
tie up with telecom operators, and so, “trying to control a frequency within a geography would be an extremely difficult process”, emphasising a possible challenge of frequency interference.
Analysts have questioned the viability of MVNO operations saying their financial sustainability will depend on telcos that are already facing immense pressure.