-
An Indian regulator has issued a consultation paper to investigate if VNOs can help add more competition to the market
-
Telcos unanimously oppose the move to restructure the VNO regulations
-
Few industry players think VNOs should be allowed to sell services of multiple NSOs
It is rare that arch-rivals Reliance Jio and Bharti Airtel, India’s top two telcos, are on the same page. The recent consultation paper on `Connectivity to Access Service VNOs From More Than One NSO’ is an aberration that finds Jio and Airtel taking a common position of not disturbing the existing rules of virtual network operators (VNOs) allowed to sell services of only one service provider.
The Department of Telecommunications (DoT) is exploring a change in the structure of VNOs in India to make the sector more competitive. In this regard, the Telecom Regulatory Authority of India (TRAI) recently came up with a consultation paper asking if VNOs should be permitted to sell services of multiple network service operators (NSOs) for providing wireline and wireless services.
While VNOs are currently allowed, the model has not been very successful in the country.
The consultation paper examines whether VNOs should take connectivity from one NSO to provide wireline service and another NSO to provide wireless services. It also asks whether VNOs should be allowed to pair with multiple NSOs for wireline services. As per existing rules, except for access services, VNOs are allowed to work with multiple service providers.
“We believe that there is no need to change the prevailing provisions that restrict the VNOs from being parented by more than one NSO for access services and other such services which need numbering and unique identity of the customer,” noted Jio’s response to the consultation paper.
Jio also said that allowing VNOs to work with different service providers for wireline and wireless services will lead to complexities in revenue accounting.
“It is Airtel’s view that a [Unified License] UL (VNO) licensee holding Access Service Authorisation should be permitted to take connectivity from only one Network Service Operator (NSO) for providing wireline access service in a licensed service area (LSA),” said Airtel’s response to the TRAI consultation paper.
Vodafone Idea, India’s third-largest service provider, has also opposed the move to change the existing VNO model.
Airtel also said that using multiple NSOs will lead to “confusion” over numbering resources. The company believes that the country is “well covered and served” by access services, so it is not clear why the VNO rules need to be altered.
VNOs to the rescue
The government hopes that restructuring VNO rules will help the struggling telcos, like state-owned Bharat Sanchar Nigam Limited (BSNL) and debt-ridden Vodafone Idea, the country’s third-largest telco.
Vodafone Idea has been losing market share for the last two to three years. While it is in the process of raising funds, it will be a long time before it is able to compete against Jio and Bharti Airtel. This means that in practical terms, India is a duopoly and VNOs can play a role in addressing this.
Duopoly results in limited options for the customers and may impact the quality of services as well.
While telcos are unequivocally against VNOs being able to sell services of more than one NSO, some organizations, particularly Tata Communications and Broadband India Forum (BIF), have voiced their support for the new concept.
“The mobile services market has become highly consolidated and it needs more competition. It needs the positivity of a VNO to arrest the situation where two out of the four operators are steadily losing market share, thereby leading to a market failure in the MVNO [mobile virtual network operator] market segment,” said BIF, an industry body representing several tech companies like Google and Meta, among others.
BIF argued that multi-operator parenting is important in promoting competition and improving the quality of services for end users. The forum also alleged that a key reason VNOs have failed in India is because the NSOs “are not forthcoming in providing network access to the VNOs.”
In addition, there have been “inordinate delays in allocation” of the numbers by the NSOs, thus making the current VNO model nonviable.
On the other hand, Tata Communications believes that working with multiple NSOs will give more flexibility and choice to VNOs and will also help them provide wider network coverage to the end users.