China gets serious about introduce private investment into broadband, with trials planned for 16 cities. But the game is stacked in favour of the incumbents, and it's not even clear who can play.
Entries in regulation (3)
That makes sense. MVNOs are about brand and customer service. Plus these guys are already in the mobile retailing game.
It makes sense too that they’ve already held preliminary talks with the MIIT via its research arm. The MIIT’s priority pretty clearly seems to be to seek out strong local brands to become MVNOs.
However, creating a competitive telecom landscape doesn’t appear to be a priority.
The concerns expressed by analysts and would-be licensees reflect this. They’re worried about the cost of resourcing an MVNO player, the lack of scale, the wholesale price and the availability of number portability, none of which is satisfied by the MIIT’s vague stipulations.
For example, the wholesale price has to be lower than the operator’s lowest retail price. As one unnamed executive says, if the lowest price is 48 yuan and the wholesale is 50 yuan, “we still have no way of launching a service, because we still have site, customer service and operating costs.”
Once again China has managed to avoid a quarter of a century of telecoms regulatory experience.
Elsewhere (including Hong Kong) successful regulation is about ensuring new players get access to infrastructure at a reasonable price and providing protection against predatory pricing and obstructionist behaviour.
The MVNO plan skips most of that. It may improve over the consultation period but basically we are stuck with the traditional post-hoc regulation. New entrants will run into trouble and the ministry will have to step in and broker an agreement. That could take up to a year.
With the spirit of reform pervading the country, perhaps now is the time to consider a dedicated telecom regulator. It can execute the detail of competition and allow the ministry to manage the big policy picture across its vast portfolio.
It can build up a body of competition expertise that will help consumers get a better deal and make the government look like it really cares. That’s a win all-round, but the probability of it comig to pass is close to zero.
The incoming players will need deep pockets and steady nerves.