Rivals cry foul over Virgin – Tata Teleservices tie-up

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The latest deal between Tata Teleservices and Virgin Mobile drew strong protest from the other GSM operators of India. The Virgin Group entered into the partnership with Tata Indicom. Tata Indicom will market certain mobile services using the Virgin brand.

The Cellular Operators Association of India (COAI) has written two strong letters demanding immediate nullification of the deal. The association further demanded an immediate probe into the deal, since the Virgin Group, under licensing agreement, can only act or operate as a franchise under the Tata Indicom brand. The Cellular Operators Association of India also pointed out that the partnership between Virgin Group and Tata Teleservices has taken place through the back door under Mobile Virtual Network Operators (MVNO) route to enter into the Indian telecommunication market. The group further pointed out that the present Indian telecommunication licensing agreement clauses prevents buying of mobile capacity from an existing operator and subsequent selling of mobile services under its name is also prohibited under the law.

A spokesperson of Tata Teleservices while replying to the above allegation says, that Tata did not violate any such laws as alleged by COAI. The government of India should decide on the policy and review its Mobile Virtual Network Operators policy. Further, the spokesperson also added that the onus is on the government to effect necessary changes and allow licensing under Mobile Virtual Network Operators (MVNO) route. On condition of anonymity, an official of the Indian Department of Telecommunication said that deal may be scrapped and the Virgin Group may have to exit the Indian telecommunication market. He further added that the authority of reallocation of spectrum lies with the Indian Department of Telecommunication and not with Tata. He said, "We are not aware that they did and it is possible we will not allow them to operate." On the other side, a representative from Virgin Mobile India, said "Our agreement does not involve selling of bulk airtime and so isn't an MVNO". Industry sources reveal that the Ministry of Telecommunication has asked for details of the agreement and it is possible that the ministry may soon release the embargo on MVNOs.

Virgin Mobile was launched in UK in 1999. Today, Virgin Mobile operates virtual networks in six countries. The company wants to capitalize on the huge opportunity that the Indian telecommunication market offers. The virtual model of MVNO would allow Virgin Mobile to enter the Indian telecommunication market at a fraction of cost of buying its own spectrum.

On Wednesday the Department of Telecommunication came out with its no objection statement. The secretary of DOT Mr. Sidartha Behura said that the ministry is open to allowing licensing agreement under MVNO in India, in the wake of growing telecommunication market in India. He further added that the ministry is also considering on the clarification sought by the COAI.

Last Updated on 27 June 2011