China to open up mobile telecom sector

China is planning to allow privately-owned companies to enter the mobile telecommunications sector in a bid to promote competition in a field that is dominated by three telecom giants.

In a plan released last week, the Ministry of Industry and Information Technology (MIIT) said it will seek opinions on a pilot program for private enterprises to buy mobile telecom services from operators and resell them to end customers.

The ministry said the program aims to allow private capital to further enter the telecom industry, give full play to the flexibility and creativity of private firms, as well as promote market competition and improve mobile telecom services.

Li Haiying, an expert with the China Academy of Telecommunication Research under the MIIT, told Xinhua on Tuesday that the program will effectively break the monopoly of major operators and stimulate innovations in business patterns of the mobile telecom sector.

At present, China's mobile telecom sector is dominated by three giants -- China Mobile, China Unicom and China Telecom.

According to the plan, Chinese-funded private companies will be able to buy basic mobile telecom services from the major operators, add their own services and then sell to customers through their own brands.

The companies will not have to build a mobile telecom infrastructure but only set up a customer service system and other supporting networks if necessary, the plan said.

The pilot program has a series of clauses to ensure the successful accession of private capital into the sector, including requirements on service quality, phone number allocation, as well as the wholesale prices for contracted services.

"The wholesale price charged by major mobile carriers should be lower than the lowest retail price of the same kind of service," the plan said.

Telecom giants must not include any exclusive clauses in the contract with private enterprises, it said.

Li said such policy designs aim to create an environment for fair market competition.

Shi Wei, an expert with the Institute of Economic System and Management under China's top economic planner, said that private firms participating in the program must strive to make innovations in their services, or else they will become just agents for major carriers.

"Private companies should develop more innovative applications and provide differentiated services to win their share of the market," Shi said.

Li also said that private enterprises have ample room for innovations and can provide diversified services of their own.

"Private enterprises in the reselling business and major mobile carriers are not only cooperation partners but also competitors," Li said.

The pilot program is designed to last for two years.

Private enterprises can send applications to telecom authorities within the first year of the program.

China has attached great significance to encouraging private investment, as it plays an important role in creating jobs, boosting domestic consumption and maintaining sustainable economic growth.

In 2010, China's State Council, or the Cabinet, announced policies to open a range of government-run industries to private investment, including water projects, power generation, mining, as well as the telecommunication sector.

To help implement those policies, the MIIT made a detailed plan for guiding private capital to enter the telecom industry in June 2012.