International mobile operators will not be able to enter India using the mobile virtual network operator route.
Their hopes for an early entry into the country have been dashed as the government is not in favour of allowing such a service to start in the immediate future.
An MVNO service, available in many European markets and in the US, involves a marketing and branding outfit that owns neither a network infrastructure or spectrum but buys airtime from an existing mobile service provider that owns equipment and licence rights to launch its own services.
This model is seen as having brought down rates by increasing competition in high-price markets.
Justifying its opposition to the MVNO service, something that Richard Branson's Virgin Telecom had planned to launch in India later this year, department of telecom officials told Business Standard, "If allowed, this will only increase the infrastructure crunch in the mobile sector."
The country's mobile tariffs were in any case amongst the lowest in the world, they added. Additionally, with India having a tele-density of a little over 10 per cent, the country needed facility-based telecom service providers rather than virtual operators, the officials added.
The move will impact players which want to enter the third generation (3G) mobile space through the MVNO route after spectrum for these services are made available.
In November 2005, Branson, the Virgin chief, had discussions with Indian operators on launching services through the MVNO model in India.
Endorsing the DoT view, the finance ministry said with convergence of broadcasting, telecom and information technology services on a single platform in the future, the demand for infrastructure would increase tremendously.
"At this juncture, there is a need to examine whether the facility-based telecom service providers should be burdened with competition from resellers who are essentially non-facility based. The basic thrust of the telecom policy is towards facility-based competition," the finance ministry added.