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China ditches government tariffs; welcomes MVNOs

As part of a drive to foster competition in the market, mobile operators in China will be able to set tariffs independently.

The regulatory decision will increase the influence of consumers in the market.

A statement from the Ministry of Industry and Information Technology (MIIT) read: “All telecom service tariffs will be regulated by the market, and telecommunications companies can independently draw up specific tariff structures, standards and billing methods.”

Previously, pricing was set by the government. With the new ruling, the three major operators – China Mobile, China Telecom and China Unicom – will decide on tariffs, which must be “fair” according to the MIIT.

The move could have a significant impact in China, particularly in rural areas where the lower average income combined with government-specified tariffs has priced out many potential mobile users.

The Chinese government is shaking up telecoms regulation as part of an effort to address complaints that the industry is inefficient. Deregulation has allowed MVNOs to operate for the first time, with the country’s first MVNO launched by Telephone World Digital Group earlier this month.

Using the T.Mobile brand – not affiliated with Deutsche Telekom’s mobile business - the MVNO provides services using capacity provided wholesale by China Telecom. Voice and data services are live in Zhejiang Province’s capital city Hangzhou and will eventually expand into the rest of the province.

MVNO licences were awarded to 19 Chinese companies last year. These included retail giants such as Alibaba and its rival Jingdong, as well as other major retailers such as D.Phone, JD.com and Suning. Foreign companies are not currently able to obtain MVNO licences.

The ‘big three’ operators are obliged to sign agreements with at least two resellers, according to MIIT proposals.

Zou Xueyong, secretary general of the Industry Association of the Mobile Virtual Network Operators, said “virtual operators will help push forward reforms in the telecom industry and drive down prices of telecom services”.

 

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