China Mobile seeks to make the best of MVNOs

Caroline Gabriel/Wireless Watch
23 Jun 2014
00:00

Despite its initial hostility to the idea of MVNOs, China Mobile is now pitching to attract new partners and attract new traffic to its networks.

Xu Gang, deputy general manager of marketing, told a recent conference that the three telcos could not reach every niche and said: “Content and service differentiation is also possible. MNOs do a single service. If you can find a better service then you can find another win-win scenario.”

Since virtual operators were first allowed this year, China Mobile has signed 17 of these partners, while there are 26 in total in the country. Three of these have launched commercial services, two on China Unicom’s network and one on Mobile’s.

The government expects 50 million MVNO connections to be signed up during 2014-2015, though this would represent only 3.5% of the market predicted by the GSM Association for the end of next year.

The most closely watched MVNO is Ali Telecom, which was set up by HiChina, part of the Alibaba Group, and will push that retail giant’s services and devices. Its first decision was to forgo a fixed monthly fee, and charge customers based on the amount of data used, including voice and SMS. It is also expected to offer additional incentives when subscribers use Alibaba’s online shopping sites.

There are still challenges for MVNOs however. The three telcos are reported to be charging high fees, and there is no support for mobile number portability in China.

In May last year, the Ministry of Industry and Information Technology (MIIT) required Chinese network owners to support MVNOs, and requested detailed plans to partner with at least two privately owned brands by year end.

This was part of cautious but important moves by the government to open the telecoms space for wider participation, investment and competition from the private sector, and to encourage innovative services. By the end of October, the two smaller carriers, China Unicom and China Telecom, had nominated 14 and 16 potential MVNOs respectively, with nine of the applicants thought to be in common.

Despite its new enthusiasm, China Mobile was far more hesitant to comply with the MIIT demands, and had been the most negative about the impact of MVNOs on its business model. It has been more aggressive than its rivals in creating its own mobile brand – one of the roadblocks in the way of an iPhone deal in the past has been its determination to promote its own user experience over that of handset makers or web players. It has also invested heavily in TD-LTE and wants to ensure the initial returns benefit its own business.

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