Does TRAI Know Something the Rest of Us Do Not?

The Telecom Regulatory Authority of India (TRAI) has recommended that mobile virtual network operators (MVNOs) be made lawful in India. Many would note that would add yet more competition to what some would say is the most competitive mobile market in Asia.

And some observers might note that competition in India is not lacking, with some areas having seven to 11 facilities-based contestants.

Nor is it entirely clear, from the outside, what the thinking is. Perhaps there is a notion that new or niche providers could arise,as any MVNO enabling rules would allow other firms not in the mobile business to become mobile service providers.

TRAI knows full well that Indian mobile and telecom providers have not expanded so quickly in rural areas because the business model is very difficult where monthly average revenue of less than $2 a month is a common expectation.

Perhaps the thinking is to encourage cable TV operators to leverage their fixed line assets for backhaul, allowing creation of a positive business case where it does not presently exist.

Well-known brands are possible new contenders, especially in the largest urban markets, where available infrastructure and the chance to create niche products is greatest.

Observers might reasonably suggest India mobile markets are so competitive there is no room for additional retailers.

That might be quite correct for standard prepaid mobile services that sell to everyone within reach of the network.

But in other countries, MVNOs based on language, for example, have proven successful. That could well be the case in the Indian mobile market.

The recommendation goes to the Department of Telecommunications, which makes the final decision. If approved, the new rules could enable market entry by new providers in the communications business, such as cable TV operators or big brands with other assets (customers, widely used apps, distribution networks).

TRAI has recommended 10-year periods for the licenses, which could be reviewed after three to four years.

MVNOs would be required to pay government license fees and spectrum usage charges (a percentage of gross revenue) at the same rates as paid by telecom operators.

Up to this point, some marketing and branding efforts somewhat similar to an MVNO business model have been tried in India, largely without success. But TRAI understands its markets as well as any entity can. So one must assume there is a perception that under-utilized assets can be brought to bear.