Virtual Telecom Operators To Be Granted Licenses In China

Reports indicate that virtual telecom operators will be issued with licenses in China as the country moves to open up the telecommunication sector. Currently the sector is dominated by China Telecom, China Unicom and China Mobile. According to a draft notice the licenses will not be limited to Chinese firms but will also be awarded to foreign entities.

Since 2013 the information technology ministry in China had been running pilot schemes regarding telecom reselling services. Virtual network operators lease the networks they offer their services through from operators. The payments are usually a standard fee as well as commission-based.

Before the licenses are issued public consultation will take place for a period of one month. According to the IT ministry limits will not be imposed on the quantity of licenses that can be issued.

Ownership reforms

Since the pilot schemes started, more than $0.5 billion has been invested by around 42 firms. The number of users on the pilot schemes reached a figure of 60 million which is about 4% of the mobile user population in China. The world’s second-biggest economy has been gradually opening up the country’s telecoms sector. In 2017 ownership reforms were initiated for China Unicom.

The release of the draft notice comes in the wake of a report indicating that the smartphone market in China has declined after eight years of consistent growth. Per research firm Canalys, annual shipments fell by 4% last year. But even as smartphone shipments fell, one of China’s largest device maker, Huawei, recording double-digit growth.

Entry-level smartphones

According to analysts the decline can be attributed to the fact that almost all Chinese consumers who were in a position to trade up from a feature phone to an entry-level smartphone has already done so. Additionally the entry-level smartphones have longer life-cycles which is currently about 26.8 months. Consequently the smartphone market in China is not expected to experience growth until 5G-ready devices enter the scene sometime next year.

The decline in smartphone shipments in China comes at a time when Chinese smartphone makers are becoming dominant forces across the globe. Huawei is for instance competing effectively against both Apple and Samsung. Currently the hardware and specs of some of the devices Huawei sells are comparable to those of Apple.

“… if you look at the Huawei Mate 10 and the Mate 10 Pro, their specs are comparable to iPhone 8 and iPhone 8 Plus. But the Mate 10 is at least 30% cheaper than the iPhone 8,” said Canalys’ research analyst, Mo Jia.

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