VNO, or Virtual Network Operator, has provided people a new way to get access to cheap, and effective internet access. While no competitor of Jio (because nothing is), a Virtual Network Operation is certainly a good choice for those who want to provide internet services in small regions.
However, the guidelines associated with VNO Licensing are quite, confusing.
That’s why, here we are, Through this article, our aim is decoding complex VNO License guidelines for your understanding.
What is VNO?
VNO refers to Virtual Network Operator, a network resources reseller who instead of producing bandwidth on their own, buys it from other ISPs and sells them to the subscribers. To facilitate this process, a Virtual Network Operator creates a virtual network which acts as a tunnel through which internet access from ISPs reaches to the customers.
Because a VNO does not produce internet resources on its own, the resources required to run it are less as compared to your standard ISP. It’s one of the reason why more and more people have started to open VNOs, especially to provide internet access is small and remote locations.
What is VNO License?
VNO License is a unified license issued by TRAI, which is Telecom Regulatory Authority of India, to those companies that want to start a VNO. There are three types of VNO and the unified license is differentiated based on that:
1. PAN India VNO: It’s an analogue to Class A ISP.
2. State-wise VNO: It’s an analogue to Class B ISP.
3. Circuit Switched VNO: It’s an analogue to Class C ISP.
What are the features of a VNO?
Following are the salient features of VNO:
1. It’s cost-effective as compared to starting an ISP: The lack of hardware requirements combined with low VNO License fee, makes starting a VNO a more cost-effective endeavour.
2. The network complexity is reduced: The lack of hardware requirements, and considering that fact that the network that does exist tends to do so in a “virtual” environment, we can truly say that VNO has less network complexity.
3. Reduced Time to Market: The buzzwords to market a VNO are “Cost-effective internet access”, “ease of set up”, and “low VNO Licensing fees”. With so many positive factors, you can get a small idea of how less marketing a VNO costs.
4. Reduced CAPEX: The lack of hardware requirements, the low fees of VNO Licensing, and the reduced market costs also reduces the capital expenditure of a Virtual Network Operator. In fact, if you’re planning to start a category C VNO (the cheapest one), you don’t need much in the way of minimum capital requirement.
5. Increased Flexibility: Because the networks that a VNO has to deal with is virtual, it’s quite easy to relocate your business (within the same region) if you wish it so.
6. The risk of spending too much is mitigated: Not investing a lot into hardware or ISP License allows a VNO to mitigate risks related to loss.
How is a VNO different from an ISP?
When we talk about a VNO License, a conversation about VNO License vs. ISP License has to be had. SO, let’s dive into this competition in the following points:
1. Validity of the Licenses:
a. A VNO License is only valid for 10 years.
b. An ISP License has 20 days of validity.
2. Impact of policy changes on the validity of the Licenses:
a. If there is a change in TRAI policies, the VNO Licenses would suffer an impact.
b. Regardless of what changes are done to the TRAI policies, once you get the ISP License, it shall stay the same till the end of its validity.
3. Franchisee potential:
a. As a VNO, you can’t franchise your network/services.
b. As an ISP, you can definitely franchise your network and services. Case and point, Reliance Jio.
4. Bank Guarantee Requirement:
a. To get a VNO License, the bank guarantee requirements are kept at minimum, especially for the class C VNOs.
b. To get the ISP License, the bank guarantee has been kept at enormous rates.
5. Hardware requirement:
a. Not being the producer of bandwidth, a VNO doesn’t require a lot of hardware to operate.
b. Being the primary provider of internet access across India, an ISP requires a lot of hard to run its operations.
What is the process of getting the VNO License?
Now, let’s discuss the actual guidelines of VNO License. In the following points, we have decoded the steps of establishing a VNO in a simple format.
1. Establish a Private Limited Company: Unless you have a private limited company, you won’t be considered eligible to file the VNO License application. Thus, before applying for the license, make sure that you’ve consolidated your business as a private limited company.
2. Choose your VNO: Now, it’s time to choose the VNO that you want to open:
a. Do you want to provide internet access across the nation?
i. If so, choose the PAN India VNO.
b. Do you want to provide internet access in one of 20 metropolitan states of India?
i. If so, go with the State-wise VNO.
c. Do you want to provide internet access within a small colony, region or a village?
i. If that’s your dream, choose the Circuit switched license.
3. Do a complete cost analysis of your license: Remember that VNO License is cost-effective only when it’s compared to the ISP License. Thus, you have keep aside, a specific amount of money to make sure that you are able to afford paying for the unified license. The fee structure is as follows:
a. PAN India VNO:
i. Entry fee: INR 15 lakh
ii. Application processing fee: INR 50 thousand
b. State-wise VNO:
i. Entry fee: INR 1 lakh
ii. Application processing fee: INR 15 thousand
c. Circuit Switched VNO:
i. Entry fee: INR 10 thousand
ii. Application processing fee: INR 10 thousand
4. File the VNO Licensing application: There is no online process of applying for the VNO License, yet. Thus, you have to go to the Department of Telecommunication and submit the application after you’ve attached the following documents with them:
a. Certificate of incorporation of your private limited company
b. Memorandum of Incorporation of your Private limited company
c. Director’s resolution stating to start a VNO business
d. The government Challan with the Entry fee specified in it.
5. Receive the letter of intent: Once you file and submit the application, the Department officer will start to process it. If the application is accepted, you’ll get a Letter of Intent.
6. Follow the rules of Letter of Intent: The letter of intent will contain instructions that would include the time of when to file the entry fee and what amount of entry fee to file. It would also entail other documents specific to your Virtual Network Operator Company.
7. Acquire the authorization of starting the VNO Business: If and when the Department accepts your application, you’ll get the Internet service license for your VNO. You can call it VNO unified License if that’s what you’re comfortable with.
1. Be precise: You cannot, and should not beat around the bush when it comes to filing the VNO application form. Present your details as precisely as possible.
2. Don’t leave any section of the application form empty: There will be sections that won’t be applicable to you. Don’t leave those sections as it is. Instead, use the “NIL” keyword to show that those sections don’t apply to you.
3. Prepare the documentation beforehand: To minimize the chance of failing the application procedure, make sure that you attach the correct documents to it. If you aren’t sure about the documents written here, consult with a VNO License consultant.
4. Keep the budget set: We should repeat what we have said, you HAVE to set the budget of your VNO license. Without it, the chance of whether you can follow the instructions specified in the Letter of Intent are low.
5. Consult with the experts: You might already have heard of this particular tip before, but it remains true to this day. Professional experts are the only ones who understand the nuances of this license. While reading this blog would give you a little clarity, it won’t be enough to file the application on your own (we held back that knowledge for obvious reasons). Therefore, consult with VNO Licensing consultants to setup your VNO center.