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Consultation Paper on MVNO

Spice Response to various Issues Issue 1. Do you agree with the definition of MVNO given in section 2.1.6? If not please suggest alternate definition with justification.

Response: Conceptually MVNO does not share the spectrum he is only bulk ,. Buyer of MOUs for further retailing, therefore the suggested Definition can be: MVNO is an entity that offers mobile Access services to Customers, but does not own its own Radio frequency,

Issue 2:

Do you think there is a need to introduce MVNO in the Indian Telecom Market. If yes, is it the right time to introduce MVNO as a distinct service provider with its own licensing and regulatory framework? Please elaborate the comments with appropriate reasoning. Each administration has adopted its own brand of MVNO and the time of its own choosing, depending upon level of competition and teledensity. In India, as of today, we have 8- 9 mobile operators in every Licensing area and with the roll out of networks by the new Licensees, the number is expected to grow to 14 or 15; indicating as it is, ample competition. In addition, it is also a fact that with the government policy of release of Spectrum on ever tightening SLC, there is hardly any surplus capacity with the MNOs with existing Infrastructure resources. However, it can be considered as a right time to introduce MVNO concept particularly to address the highly targeted niche market like the rural areas and / or product centric services to meet evolving customer needs. This will also help deepening and widening of the market, hence MVNOs have a potential to add to the current offerings by the MNOs. MVNOs may be introduced under distinct Licensing Framework, covering the services & Concept of MVNOs, while Commercials should be left to mutual negotiations.

Response:

In case, an MVNO is non-facility based, then he should be governed by the regulations of MNO, particularly with regard to billing, customer care, distribution, marketing and branding, sales etc. However, if an MVNO is facility based, then separate regulation needs to be put in place.

Issue 3:

To what extent should the MVNO be permitted to set up their own infrastructure? It should be left to MVNO to decide the business model as Suited to its objectives.

Response:

Issue 4

(i):

What Regulatory Model should be followed for MVNO in the Indian context? What kind of obligations may be imposed on MNOs so that Mobile Virtual Network Operations are implemented effectively in India benefiting the customers?

(ii):

Response: The wholesale service sold by an MNO is an essential facility and the retail competitor (MVNO) remains economically and technologically dependent on him. Therefore, MVNO should follow relevant aspects of existing regulatory model. The opening of the network by an MNO to MVNO should be on voluntary basis, MVNO must be responsible for fulfilling all the QOS parameters, including continuity of service and National security aspects, while providing services to its customers. What should be the eligibility criteria for MVNO? MVNO, for all practical purposes is a subset of MNO or so to say, an enhanced franchisee with its own branding. Therefore, any established FMCG company with its own retail chain and marketing acumen should be eligible..

Issue 5: Response:

Issue 6:

Do you suggest different eligibility criteria for different MVNO models and regulatory frameworks? If Yes, Please suggest with justification thereof.

Response: Business model adopted by an entity depends upon its business Objectives, and goal it wishes to achieve.It is not prudent to

Discriminate on the basis of business model. Therefore, elgibility Criteria and Regulatory framework has to be the same . Issue 7: Should there be any restriction on the number of MVNOs attached to an MNO? Please elaborate the comments with appropriate reasoning. Response: No restrictions. Market forces and mutual commercial agreements will take care of that. However an MVNO can be associated with only one MNO in a licensing area. This will ensure that MVNO does not undertake arbitrage. Issue 8: What should be the commercial model/framework for spectrum sharing by MVNO; w.r.t. (i) Department of Telecom and (ii) MNO?

Response: MVNO must pay for the Govt levies including spectrum charges on the terms of that of his MNO , based on his AGR adjusting payments made to MNO, commercially; as pass thro’ revenues..

Issue 9:

What should be the service obligations of MVNO? Please list them with justification thereof.

Response: The Service obligations of a non facility based MVNO should be concentrated on customer acquisition, customer management and Value Added Service Provisioning. For facility based MVNO, the service obligations would enhance so as to include part of Network Services as well.

Issue 10.

What should be the method and consideration for determining the entry fee for MVNO?

Response: To encourage serious players , entry fee depending upon Service area category may be prescribed. It could be 5 % of that of an MNO in that service area.. Issue 11. What should be the definition of AGR for MVNOs?

Response: The definition of AGR for MVNO will be the same as that of MNO. Payments made to MNO should be accounted as pass thro’

revenues, so that Govt receives its levies from both the sources transparently., without any duplication.

Issue 12:

What is the best way to protect the subscribers both in terms of continuity of service and applicability of tariff plan: i) in case of a dispute between MVNO and MNO? ii) in case MVNO wants to exit the business.

Response: Service Provisioning and Tariffs should be governed by the same regulations as applicable to an MNO including making reference to TRAI / TDSAT for resolution. In case of any dispute between the two,MVNO/ MNO should ensure the continuity of same level of service to the end users without any break in service. This aspect should be governed by commercial agreements and regulatory framework between the two. MNO License should be modified to cover this appropriately. Whether MNO decides to cut off network facilities to MVNO OR MVNO decides to quit prematurely, in either case operators must Inform the affected subscribers well in advance giving opportunity Of being serviced from an alternate network to avoid any disruption To his communication facilities. Issue 13: Should there be any roll out obligations specified for MVNO? If yes, what should be the penal provisions for failure/ delay in fulfilling the obligations.

Response: There should not be any Roll out obligations on MVNOs. . Issue 14: What shall be the specific guidelines on the Mergers and Acquisitions of MVNO? Please elaborate the comments with appropriate reasoning. Response: An MNO can have as many MVNOs as it can adequately serve, but MVNO can be associated with only one MNO. Therefore, MVNOs belonging to one MNO can merge without any restriction, But in case of MVNO switching an MNO , he must surrender The existing with due notice and choice to his customers, Before shifting to the new one. Issue 15: Should there be any restriction on cross holdings between two MVNOs and between MVNO and an MNO in a service area? Please comment on the nature and scale of restructuring.

Response: As suggested above that MVNO can be associated with only one MNO, therefore cross holding amongst them should be allowed; his holding in any other MVNO/MNO should not exceed 10% in that licensing area. Issue 16: What should be the FDI limit for MVNO?

Response: Same should apply as that in the case of an MNO I,e 74% Issue 17: Response: What should be the quantum of FBG and PBG for MVNO? Since MVNO is not responsible for spectrum, PBG Should not be applicable, while quantum of FBG Should be based on the same approach as adopted for MNO. Any other relevant issue you would like to suggest /comment.

Issue 18:

Response: The Regulation and Govt policies , in the past, have taken into Account the constraints in Spectrum availability, and business Approaches of the Industry.Now, since the constraints are getting Over, Regulation should aim at counter measures ,such as :

Government policies of “No Capping” implemented so far has provided ample competition on the one hand and at the same time it has resulted in the fragmentation of Spectrum usage in the hands of the operator. This fragmentation of the Spectrum has resulted in limited exploitation of the Spectrum resources. There is an opportunity to correct the situation by revisiting the M&A guidelines In the light of proposed MVNO policy so as to permit 2 MNOs to pool their Spectrum allocation in a Licensing Area subject to an already laid out overall limit and share of the extra capacity thus generated can be mandated to be made available to MVNOs.,in a consortium approach. . Such a dispensation of permitting pooling of Spectrum resources will help the Spectrum exploitation to society’s benefit and shall undo the anomalies brought forth by fragmentation, in addition to generating resources for the government kitty by way of prescribing charges in respective pooling proposals. It may also require appropriate Licensing and regulatory framework for the sake of level playing field and to sub serve the consumer interests.