China has approved a pilot scheme allowing private companies to piggy back on the country’s three dominant telecommunications providers to offer own-brand mobile services, opening the world’s largest mobile phone market to increased competition.
Authorities have approved 11 private “virtual carriers” to resell mobile telecommunications services, the Ministry of Industry and Information Technology (MIIT) said in a statement on its website on Thursday.
The pilot opens up the market for privately run companies to offer discounts or more attractive deals, raising competition in a market dominated by state-owned enterprises China Mobile Ltd <0941.HK>, China Telecom Corp Ltd <0728.HK> and China Unicom Hong Kong Ltd <0762.HK>.
“It’s a milestone. It will draw private investment, and stimulate competition and innovation in the telecoms sector... giving a wide range of consumers greater choice and better service,” the ministry said in the statement.
Under the pilot, private companies will be able to buy mobile communication services in bulk from providers which have their own mobile networks, repackage them and sell them to end users, the official Xinhua news agency said.
China Mobile, which recently reached an agreement to sell Apple Inc’s <AAPL.O> iPhone, dominates the domestic market with over 760 million subscribers. China Unicom and China Telecom trail with 280 million and 185 million users respectively.
The 11 companies include Net.cn, a subsidiary of online retail giant Alibaba, rival e-commerce firm Jingdong and major Chinese mobile phone retailer D.Phone. Shenzhen-listed Telling Telecommunication Holding Co <000829.SZ> and Beijing Bewinner Communications Co <002148.SZ> also got the green light.
The approval documents lay out rules for market supervision, service charges and quality, consumer rights and information protection, the ministry said.
It did not detail how the pilot would affect the network providers.