India's government has received mobile virtual network operator (MVNO) license applications from 80 companies after deciding earlier this year to let MVNOs provide services in the country. The licenses are designed to let companies offer telecom services by purchasing airtime and bandwidth from existing network operators.
Experts believe that a number of incumbent operators will be keen to support MVNOs, especially in rural areas. Many incumbents, particularly government-owned service providers like Mahanagar Telephone Nigam Ltd. (MTNL) and Bharat Sanchar Nigam Ltd. (BSNL) , have lots of capacity that could be leased to organizations procuring MVNO licenses.
"It will definitely help the service providers with a lot of fiber assets, like BSNL, MTNL, Railtel and Powertel," says Amresh Nandan, a research director at analyst firm Gartner Inc. "We believe that two to three MVNOs will emerge at regional level and target rural areas and small towns."
Private-sector network operators could also benefit from MVNO business in areas where yields have typically been low. "It makes sense for private players to go for the MVNO model by outsourcing at regional or rural level," says Nandan. "It empowers them to focus on areas yielding bigger profits."
India's telcos might also be interested in setting up their own MVNO operations, developing local brands to address particular regions. As the broadband market expands, service providers are being forced to educate consumers on the benefits of Internet connectivity. A local player with local knowledge and branding might be more suited to this role.
"In India, as in other markets, MVNOs would need to identify a niche," says Nandan. "MVNOs would need to focus on branding, customer service and educating the customers," That could see a variety of different MVNO business models emerging in the Indian market.
Even so, in other parts of the world, MVNOs have added to the pressure on network operators, squeezing margins with low-cost tariffs. That is sure to be a worry for Indian telcos, although perhaps less so than elsewhere. Average revenues per user (ARPUs) in India are among the lowest in the world, which will make it hard for any MVNO to compete on price. And if MVNO activity is largely confined to those regions in which network operators are less active, there may be even less cause for concern.
— Gagandeep Kaur, Contributing Editor, special to Light Reading