The Telecom Secretary Siddhartha Behura has said that that they’re not going to vet the Virgin Mobile=Tata Teleservices deal - they’ve only asked for information because some objections had been raised. So the deal appears to be through. In fact, the entire controversy may result in the Indian government doing something quite unexpected - allowing the entry of MVNOs. Behura has said that they’re open to allowing MVNOs, and the Department of Telecom (DoT) may ask the TRAI to give its recommendations on the issue. But that’s going to take time - the TRAI will study global practices, seek stakeholders comments, hold an open house discussion, and then finally submit recommendations to the DoT for consideration. So don’t expect a policy on MVNOs anytime soon. Meanwhile, ET reports that Virgin Mobile (NYSE: VM) has signed up 500 subscribers within two days of launch

So what will happen if MVNOs are allowed in India? Unlike Tata, most operators don’t have bandwidth to spare in metro cities - some have struggled for spectrum in the recent past. In non-metros, expect regional content services and innovative plans in order to increase the network usage. Virgin is among the few successful MVNOs in the UK while Disney (NYSE: DIS) had to pull the plug on its MVNO last year. More MVNOs could also help the operators pass on the burden of sustaining ARPUs - competition between MVNOs could help operators play one against the other, like they did with content providers.
Cerius Shah adds that application service providers may look at buying out airtime and bundling their existing services and content with handset and subsidized airtime. What’s to stop a 58888 (Times Group) or an Hungama from becoming more than a content play considering they already have operator relationships handy with some operators having tiny allotments of spectrum in high yield areas like the metros. 

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