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Monday, May 20, 2024

Monopolistic incumbent telcos threaten MVNOs in India

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In Short:

The entry of Reliance Jio in 2016 led to competitive mobile tariffs in India, causing challenges for Mobile Virtual Network Operators (MVNOs) in the country. Incumbent telecom operators and BSNL are not enthusiastic about MVNOs, leading to their failure to take off. Experts suggest MVNOs explore opportunities in IoT and travel sectors. MVNOs face tough competition as host telecom carriers offer competitive pricing. Policymakers need to act to save the struggling sector.

Mobile Virtual Network Operator Industry Faces Challenges in India

The Mobile Virtual Network Operator (MVNO) industry in India is facing significant challenges due to the highly competitive mobile tariffs and lack of support from incumbent telecom operators and state-run Bharat Sanchar Nigam Limited (BSNL), according to industry analysts and the Virtual Network Operators Association of India (VNOAI).

Industry Background

MVNOs in India are licensed resellers who purchase bulk voice and data from telecom carriers and resell services under their own branding to niche segments like rural consumers and small businesses. However, despite government licensing of over 80 companies, the sector has struggled to establish itself over the past seven years.

Challenges Faced

Incumbent telecom operators like Reliance Jio and Bharti Airtel view MVNOs as competitors, while BSNL, with significant spare capacity, has not fully leveraged the potential of MVNO partnerships. The lack of government mandate for network integration with MVNOs has led to what industry experts describe as “policy paralysis” in the sector.

Recent Developments

BSNL’s partnership with mobile payment firm AdPay to launch the virtual telco AeroVoyce did not meet revenue expectations, leading to concerns among industry associations. Efforts to collaborate with BSNL for mutual benefit have faced challenges, with the telco’s market share remaining low compared to private operators like Reliance Jio and Bharti Airtel.

Industry Experts’ Views

Industry experts highlight the changing landscape of mobile services in India, with MVNOs struggling to differentiate themselves from host carriers offering competitive tariffs. While opportunities in areas like IoT and travel may provide a lifeline for MVNOs, policymakers need to address the sector’s challenges before it faces further decline.

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