Chinese state news agency Xinhua has announced the launch of China’s first mobile virtual network operator (MVNO), T.Mobile, on Sunday. The provider piggybacks on the network of China Telecom but is currently limited to Hangzhou, the capital of Zhejiang province, although the operator plans to expand to other areas of the province. T.Mobile is a unit of Chinese firm Telephone World Digital Group (TWDH), not to be confused with the preferred T-Mobile moniker of Germany’s Deutsche Telekom (DT). TWDG is one of 19 companies granted MVNO licences, with others including a subsidiary of e-commerce giant Alibaba and retailers Suning, JD.com and D.Phone. The other MVNOs are due to launch shortly, and Suning and D.Phone began taking pre-orders for their service on 1 May.
The potential impact of MVNOs on China’s telecoms market is widely disputed, with many commentators expecting the high prices levied on virtual providers by network operators to limit their effect on competition. Xinhua cited several unnamed industry insiders as saying that the poor prospects for profitability would hamstring the MVNOs ability to drive competition, with one executive from China Telling Communication noting that each MVNO would require one million active subscribers to reach break-even. Nevertheless, some areas of the sector remain optimistic about the introduction of privately-owned MVNOs into a market previously controlled by three state-backed entities, namely China Mobile, China Unicom and China Telecom. Zou Xueyong, the secretary general of China’s Industry Association of Mobile Virtual Network Operators, remained adamant that: ‘Virtual operators will help push forward reforms in the telecom industry and drive down prices of telecom services.’