Can MVNO Policy be Re-Wriitten in India after Virgin’s Failure ?

In India, Virgin Mobile started its MVNO (though later changed, as a JV partner to Tata Indicom) in 2008. The company used Tata’s CDMA network to offer its services under the brand Virgin mobile and focused on attracting the youth segment with a heavy focus on advertising lower tariffs. Virgin, along with Tata, was the first to introduce “1p/sec call rates” and “get paid for incoming calls” like offers in the country. After failing to make an impact in a market with already low tariffs, Virgin decided to sell its stake to Tata.

India is a diverse Country with Large Population like China and here is how they are going to Play the MVNo Game in China.

  • All telecom operators will have to sign MVNO agreements with at least two interested parties.
  • The service provisioning for MVNOs cannot be inferior to the telecom operator’s own service and network quality.
  • The wholesale price charged to the MVNO should be lower than the retail price, but the MIIT has not indicated that it plans to set the wholesale price.
  • The resellers would be liable to the usual regulations that apply to telecom companies.

We believe the key here is that telecom operators are required to sign up with only two interested parties, and the fact that MIIT has not mentioned that it will set the wholesale price.

Usually, MVNOs have succeeded in markets with high tariffs, where the MVNOs cater to the low-end price sensitive segment, but which the mobile operators do not want to address to prevent cannibalization of the high-end market. That explains the success of the likes of TraFone, Virgin Mobile, Carphone, and Walmart Mobile.

In several markets MVNOs are merely low-end brands launched by incumbents, again aimed at addressing specific market segments. These MVNOs are often 100% owned by the telcos themselves.

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