The Indian government has welcomed the mobile virtual network. During the month of August 2008 Indian Telecom regulator, the Telecom Regulatory Authority of India (TRAI) recommended this. The detailed description of guidelines regarding MVNO entrants shall be released soon by the government. Such an approval will be advantageous for both the existing MNO as well as the new entrants.

The regulator was of the opinion that MVNO will assist in promoting in the development of the mobile market. This development will contribute to the 500 million wireless connections by the year 2010. The entrance of the MVNO shall attract more new entries. The main terms of the MVNO are given below.

• The Telegraph Act declares that MVNO need a license for its operations in India. The license is related and depend son the area of service that MNO has.
•  The entry fee and the license fee needs to be paid in full by the MVNO. The entry fee is around 10% of the MNO’s entry fee. The annual license fees are settled as to be same as the MNO.                                                                                                               
•   There is also a question of Interconnection charges. This depends on the business settlements. The TRAI recommends that a rate has to be settled between MNO and the MVNO and this should be based on market forces.                                                
•  The limit for FDI or foreign ownerships is bounded at 74% for new entries. This is same for MNOs in India.                                                                                                           
• The section of Consumer Protection is also something to be taken care of. There is the requirement to protect and safeguard subscribers from any mishap of policies between MNO and MVNO.

 
The fact that mobile penetration in rural region is very low around at a rate of 26% is a proper opportunity for the MVNO. The existing operators in India are all focusing on capturing the rural regions very aggressively. However for new MVNO entrants the competition is difficult and the situation is quite intense to stay back in such markets for long at low margins.

For the new entrants the urban regions will also be not very easy. 30% of the total population in India stays in urban cities and towns. Mobile penetration is good over here. The MNO are competitive about prices over here. This is in relation to domestic or local call rates. Hence from the financial point of view for the MVNO it does not make a meaning to compete.