After 12 months of planning, the announcement that Virgin Mobile was going to launch as an MVNO in India has hit an immediate snag. Vodafone and other Indian operators have demanded that the government halt the launch claiming that the MVNO model is not permitted in India.
The Cellular Operators Association of India, of which Vodafone is a leading member, maintains that Virgin Mobile is attempting to enter the market using an illegal route where it effectively buys mobile capacity wholesale from Tata and sells it on under its own brand--an approach that has been outlawed by the government.
The Indian Department of Telecommunications has responded by stating that Virgin Mobile could be ejected from the Indian market. "The spectrum to be used by the Virgin-branded mobile service was allocated to Tata. It is up to Tata to intimate any transfer of that spectrum to the department," said a spokesman.
Virgin Mobile claims that its branded franchise agreement with Tata does not involve it setting up its own subscriber management and billing systems. Instead, Tata Teleservices will continue to use its Tata Indicom brand for its mass-market services, but will offer Virgin Mobile-branded services specifically to consumers aged between 14 and 25. Tata will pay a fee to Virgin for every user that signs up as a Virgin Mobile customer.