MVNO market opens up in China

Kuo Pin Ng
23 Jan 2015
00:00

An emerging MVNO industry in China is receiving more attention despite a flurry of activities elsewhere in the world.

A total of 42 private enterprises have so far obtained such licenses since China’s Ministry of Industry and Information Technology started issuing them at the end of 2013. The new entrants were approved to offer resale services on a trial basis, using bandwidth from the country’s three incumbent communications companies.

Essentially, MVNOs – communications companies that may not own the wireless infrastructure over which they provide services -- resell the voice and data services of big operators, but often at much lower prices and with more flexible plans. However, the environment that China's MVNOs are entering into is a totally different from what their predecessors in Europe and North America saw in the past decade.

Mobile internet is booming and changing the way consumers behave and businesses operate. Digital customers are using multiple types of mobile devices, and over-the-top (OTT) service providers are cannibalizing the operators’ traditional voice and text business.

Thus, these new MVNOs nowadays must focus on providing innovative services, particularly to vertical industries, while keeping a lid on costs. But they must also find a way to function in an ecosystem that includes China’s leading operators, other MVNOs, regulatory authorities and OTT providers.

Of course, large operators — the cornerstone of the industry — have their own set of issues to address. By collaborating with MVNOs, these operators can gain strengths in three key areas.

First, enabling MVNOs to use their networks means operators must learn how to tap into their investments in networks more efficiently, which can ultimately help them develop and provide the kind of digital services their customers want. Second, by cooperating with virtual operators, operators will be better able to provide coverage in the niche markets where it might previously have been too costly to do so. Third, in their quest to transform into integrated digital services providers, large operators can collaborate with MVNOs — positioning them as the “vanguard” of new services in new geographies — without the need to invest in additional resources.

Virtual operators have their own essential roles to play, if they want to be successful. First, they should maximize their freedom from burdensome network-related costs, and keep their business models as flexible as possible. Next, they should collaborate with all of the large operators, rather than one or two, to ensure the widest choices in terms of markets, geographies, and devices for their customers.

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