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Telecoms plan needs strong regulatory base

By Xin Haiguang (Global Times)

08:58, January 10, 2013

The Ministry of Industry and Information Technology (MIIT), China's telecoms industry regulator, recently drafted a pilot plan for the mobile telecoms resale industry, which some say could mark a significant step toward breaking up the long-monopolized market.

Specifically, the MIIT's plan would grant qualified companies mobile virtual network operator (MVNO) licenses which would allow them to purchase mobile telecoms services in bulk from the country's "Big Three" telecoms operators - State-owned China Mobile, China Unicom and China Telecom - and then resell them directly to customers. These services could be repackaged with sellers' own value-added mobile features, such as preloaded applications for gaming, messaging and e-commerce.

Many believe that China's first batch of MVNO licensees would include the country's largest Internet companies. Tencent Inc has already been tipped by some industry watchers as a strong contender to become the first participant, although the company has yet to comment on the matter.

It is already quite common in many developed markets for private companies to resell mobile telecoms services and the MIIT's move could potentially invigorate a sector which has long been the exclusive turf of the "Big Three." But before authorities put their final stamp on such plans, tougher oversight measures need to first be installed in order to ensure that customers and licensees benefit in the expanded market.

Once the private sector is allowed to resell mobile services, the country's three leading telecoms operators could try to manipulate the prices that they charge to MVNO licensees, who would then have to pass on their costs downstream. In fact, many within the public already suspect China's telecoms leaders of fixing prices on their mobile Internet services.

Meanwhile, regulators should also keep a close watch on MVNO license holders, especially since the first group of licensees would most likely be aggressive businesses who could, at the expense of their customers, try to test the bounds of the new market in the pursuit of maximum profits.

Problems which emerged in the broadband market could paint a picture of what regulators have in store if the above-mentioned pilot program takes off. In recent months, many local broadband service providers - who resell access to broadband networks from the country's three telecoms giants the same way that MVNO grantees could someday resell mobile Internet services - have been caught delivering slower connections to customers than advertised in order to shore up their profits.

In light of this example, without a way to keep tabs on scattered MVNO licensees, mobile Internet users could suffer the same fate as broadband subscribers.

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