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TRAI Considers Multi-Telco Agreements for Virtual Network Operators

Should virtual network operators (VNOs) be allowed to pair with more than one network service operator to provide telecom services? Historically, this has been a divisive question with telecom companies standing against such a provision.

telecom tower

The Telecom Regulatory Authority of India (TRAI) has put out a consultation paper seeking stakeholder comments on whether virtual network operators (VNOs) should be allowed to pair with more than one network service operator to provide telecom services. A VNO is an entity that doesn’t own the infrastructure or spectrum but is licensed to provide customer service riding on top of a telecom company’s network. VNOs buy talk time and bandwidth in bulk from the telco to sell to their users.

TRAI had previously conducted a consultation on VNOs in 2015 and concluded that VNOs should be allowed to enter agreements with more than one telco for all other services except access services (which include internet access, calling, and messaging) and such services that need numbering and unique identity of the customer. This recommendation was reflected in the Unified License for VNOs released by the Department of Telecommunications (DoT) in 2016.

Why it matters:

Given that VNOs rely on telcos’ infrastructure to provide their services, the quality of their service is directly proportional to that of the underlying network. If VNOs are allowed to switch between different telcos, they would be able to ensure better quality service for their customers. They would also get to a scale where they could compete with telecom companies.

Telecom companies have historically not been in favor of VNOs being allowed to pair with multiple companies. In 2008, TRAI conducted an open house discussion on mobile virtual network operators (wireless VNOs). Bharti (Airtel’s parent company) and the Association of Unified Telecom Service Providers of India (AUSPI) argued that a telco should be allowed to tie up with as many MVNOs as they want in a service area but MVNOs shouldn’t be allowed to do the same. At the discussion, Bharti said that this was a “win-win proposition” for both parties as it would develop a confidence level between the MVNO and the telco, avoid anti-competitive behaviour, and promote long-term business relationships.

Are any VNOs allowed to pair with multiple telcos?

In 2016 the DoT introduced a sub-category for VNOs called “VNO Category B”, these are virtual network operators that provide direct inward dialing (DID)— a service that lets businesses set up phone numbers that send callers straight to a department or individual.

For VNO category B, the serviceable area was decided to be the districts of a state. TRAI was asked to give recommendations on the authorizations required for providing VNO category B services. TRAI notably said that the VNOs under this category should be allowed to have an arrangement for connectivity with different telcos at different locations. It said that the authorization for this category would be limited to wireline VNO services and those applying for it would be limited to providing services within 4 districts of a telecom circle. If a service provider wants to cater to more districts within a circle, they would be required to obtain the Unified License for VNOs.

Based on TRAI’s recommendation, DoT amended the Unified License for VNOs and stated that while VNO category B will be allowed to pair with more than one telco, they would have to ensure “non-breachable logical/ virtual partitioning” in the VNOs under category B to separate the connection points between the VNO and different telcos. This was required to prevent call flow between different telcos. The DoT also said that category B VNOs would not be allowed to provide internet connectivity and national long-distance (NLD)/ international long-distance (ILD) calls. Category B VNOs are required to inform the DoT if they are entering agreements with more than one telco.

The context behind the consultation:

The consultation is in response to a reference by the DoT sent to the regulator in July last year. In this reference, the DoT had received representation from unnamed persons/organizations arguing that VNOs should be allowed to take connectivity from more than one telecom company in the following circumstances:

  • When a VNO wants to take connectivity from one telco to provide wireline services and another to provide wireless services.
  • When a VNO wants to provide only wireline services but may be required to pair with more than one telco to do so. For instance, if a telco doesn’t provide services in a geographical area that the VNO wants to cater to.

As such, the DoT asked TRAI for recommendations on the following:

  • How many telcos should VNOs with access service authorization and wireline services be allowed to pair within an area?
  • VNOs having Access Service authorization and providing both wireless and wireline services can be permitted to take connectivity from one telco for wireless services and another for wireline services in a specific area.

Questions for consultation:

  • What is the maximum number of telcos that a VNO should be permitted to take connectivity in a licensed service area for providing wireline services? In case, this figure is more than 1, stakeholders must provide the terms and conditions for providing this connectivity.
  • Whether a VNO should be allowed to enter agreements with separate telcos for wireline and wireless services. What should be the terms and conditions for permitting such agreements?
  • Whether there are any other relevant issues or suggestions related to VNO agreements with telcos.

The consultation is open for comments till 22 March 2024 and for counter comments till 5th April 2024.

Note: The story was updated on March 26, 2024, at 12:48 PM to correct a typographical error.

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