Mainland to open up telecoms market to local private sector

Government issues draft proposal for a two-year trial to let non-state players into cellular game, breaking national carriers' stranglehold

PUBLISHED : Thursday, 10 January, 2013, 12:00am
UPDATED : Thursday, 10 January, 2013, 4:21am

Beijing is fast-tracking the mainland's long-awaited telecommunications reforms under a plan that would let mainland private companies provide domestic mobile services.

The initiative could bode well for the reform-minded premier-in-waiting, Li Keqiang, as he pushes forward a policy that has made little progress since it was initiated in 2010.

Li, who will succeed Premier Wen Jiabao in March, has encouraged greater market competition in the country as a way to stimulate trade, boost consumption and create more jobs.

The Ministry of Industry and Information Technology announced on Tuesday that it had drawn up a draft proposal to introduce so-called mobile virtual network operators (MVNOs) in the country through a two-year trial.

Public feedback on this plan will be solicited until February 6.

The regulator's proposal said private mainland companies, with management and technical staff of less than 50 people and more than eight years' experience in the communications and information technology industry, could apply to be an MVNO.

Successful applicants will be able to lease bandwidth and repackage mobile services from any of the country's three nationwide telecommunications carriers: China Mobile, China Unicom and China Telecom. Market research firm Gartner defines an MVNO as a company that does not own a wireless spectrum licence, but sells services under its brand name using the network of a licensed operator.

"The new measure is a moderate attempt to break the monopoly and bring opportunities to private companies, even small and medium-sized ones," telecommunications analyst Xiang Ligang told the Shanghai Daily.

In 2010, the State Council issued guidelines to allow private investment in sectors that were open only to state-owned companies. These included telecommunications, transport, energy and public utilities. Key reforms, however, were not fully set in motion.

MVNOs are known to be most prevalent in mature telecommunications markets where mobile-user penetration exceeds 100 per cent, such as in Hong Kong.

Data from the Office of the Communications Authority show that 1.273 million mobile users in Hong Kong were served by MVNOs at the end of October. The city has 12 MVNO licensees, including the Hong Kong units of China Mobile and Unicom.

China Telecom, which is the mainland's No 3 mobile network operator, launched MVNO services in Britain in May last year under the CTEcelbiz brand, targeting Chinese expatriates and visitors.

That business runs on the network of British service provider Everything Everywhere.

China Telecom said it planned to expand its MVNO presence to France, Germany, Italy and Spain from this year to 2014.

Pyramid Research has forecast the total worldwide MVNO subscriber base to grow 10 per cent annually from this year to 2016, when these operators are projected to capture almost 214 million users.

There were 812 MVNOs at the end of May last year, according to research firm Wireless Intelligence. Europe is home to about two-thirds of the world's MVNOs.