China’s telecoms regulator has proposed issuing MVNO licences to private companies, in a move which would open up the country’s mobile sector for the first time.
The Ministry of Industry and Information Technology (MIIT) released a consultation…
China’s telecoms regulator has proposed issuing MVNO licences to private companies, in a move which would open up the country’s mobile sector for the first time.
The Ministry of Industry and Information Technology (MIIT) released a consultation paper on 8 January which recommends allowing domestic private companies to provide mobile services, as opposed to the three state-owned operators which currently monopolise the market.
The proposal does not extend to foreign investors.
“The consultation is not implementing privatisation, but opening up the market to non state-owned operators,” Michelle Chan, partner and head of Asia TMT at Herbert Smith in Hong Kong, told TelecomFinance. “It’s been in the pipeline for at least a year.”
Internet services in China have always been open to domestic private investors and substantial investments have been made in recent years, so the government may wish for a similar situation with mobile, she explained.
Companies wishing to apply for an MVNO licence must have a minimum capital of RMB10m (US$1.61m) for nationwide businesses and RMB1m (US$161,000) for intra-provincial business, according to a bulletin today from Herbert Smith.
Chan said that requirements could be much higher, but minimum capital had been kept low by the government in order to encourage applications.
“Resale of mobile service is treated as a basic telecoms service under the current PRC telecom regulatory regime and the minimum capital requirements for that would be a lot higher,” she explained. “However, the government has treated the resale mobile service as a value added telecom business, so capital requirements are lower.
“Furthermore, under current PRC law, basic telecoms service operators must be majority state-owned, so the government has lifted this requirement by treating this resale business as a value added telecom business.”
The new government proposal has been greeted with pessimism by some, who argue that it would be difficult to persuade a subscriber to choose an MVNO as the state operators – China Telecom, China Unicom and China Mobile – are so strong.
It has also been suggested that the operators may be reluctant to provide products and services to competing MVNOs, although laws are in place to mitigate this.
“Specific implementation rules have been proposed to prevent anti-competitive behaviour, so the state-owned operators cannot give poorer products or services to the MVNOs,” said Chan.
