TRAI to usher in the era of boutique operators

An important new recommendation made by the Telecom Regulatory Authority of India (TRAI) may unleash the era of the “small scale” or “boutique” telecom brands in the country.

It will also offer a way for the new telecom operators — who don’t have the appetite or funds to start operations in India’s hyper-competitive mobile market — to meet their legal obligations by expanding their networks.

In its recommendations on telecom infrastructure policy, the TRAI has, for the first time, urged giving legal status to ‘virtual’ mobile operators or MVNOs.

Under the suggested policy, which is likely to be made part of the Telecom Policy 2011 due in four months, any company can purchase a ‘spectrumless’ telecom license at a small price. Having purchased the freely available license, the company can then tie-up with an existing operator for sharing either the latter’s spectrum alone or the entire network.

The ‘virtual’ operator can then launch its own branded services, somewhat similar to how Virgin Mobile has launched in India, though Virgin’s is primarily a marketing deal.

Such a service provider can be based even in a single district and a mobile operator can support several such ‘virtual’ operators across several districts in the state.

“Allocation of numbers, number portability, interconnection with other service providers and roaming to be provided to MVNO by the parent Mobile Operator,” the TRAI says in its recommendations.

“Boutique operators,” already present in markets like the US, typically cater to geographical or demographic niches, such as those speaking a particular language, senior citizens etc..

The policy, if implemented, will give a welcome way out to new operators who are yet to start their operations. Many operators, such as Etisalat and Loop, are yet to start large-scale, commercial operations in most of their circles due to the intense competition in the market and the investment required to roll out a network.

According to the suggested policy, such operators can now simply hire other ‘virtual’ operators and the latter shall under-take the establishment, expansion and operation of the physical infrastructure such as towers and anetennae. What’s more, the ‘mother operator’ can claim the subscribers of his ‘franchisee’ as his own, in order to meet roll-out obligations.

“In case MVNO desires to exit the business, It shall give six months’ notice to subscribers, Mobile Operator, Licensor [Government] and the TRAI before stopping its services. Consequently, the MNO [mother operator] should offer its services to the subscribers of MVNO to migrate to any of the tariff plan of MNO without any extra charges,” TRAI adds.

India has one of the world’s most competitive markets, with players such as Bharti Airtel, Vodafone Essar and Idea Cellular.