It has proposed a two-year trial period in which the three mobile operators have to take on at least two MVNOs each. The consultation period is 30 days and closes on February 6, 2012. The MITT hopes that the existence of MVNOs will increase private investment in the Chinese telecom industry.
Ovum believes that the existing Chinese mobile operators will be resistant to allowing new entrants into the market, but that there are good opportunities for MVNOs and mobile virtual network enablers (MVNEs) that can strike up mutually beneficial agreements.
Regulatory intervention doesn’t always equal immediate success
While the MITT is proposing that each network operator has at least two resellers on its network, it hasn’t set out any details on how it will enforce this. In our experience, most regulators/government bodies step back from setting wholesale prices, which means that MVNOs and network operators are able to negotiate wholesale rates and any additional support services.
However, these types of commercial negotiations can often be very lengthy. In addition, operators that are facing possible regulatory action can state that they are in negotiations with MVNOs, thus complying with the regulator’s conditions, when in reality they are stalling the process to delay further competition.
The MITT has stated that network operators must offer a service that is at least as good as that which it offers to its own customers. However, MVNO contracts are so detailed that it is not sufficient to merely state that an operator must offer the same services to its wholesale customers as it does to its retail arm as proving and enforcing breaches can be difficult if an operator is uncooperative.