China's first mobile virtual operator launches business

HANGZHOU -- T.Mobile, a unit of Telephone World Digital Group, on Sunday became China's first mobile virtual network operator (MVNO) to offer wireless voice and data services.

Currently, the services, wholesaled from China Telecom, are restricted to Hangzhou, capital of East China's Zhejiang province, but they will expand to other parts of Zhejiang later, the company said without elaborating.

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MVNOs do not own telecommunications infrastructure but provide services through network access they have leased at wholesale rates from another mobile operator.

Telephone World Digital Group is one of 19 companies, mostly privately owned, that have received mobile virtual network operator licenses. The companies also include subsidiaries of e-commerce giant Alibaba, and retailers Suning, JD.com and D.Phone.

Several other virtual operators are also expected to begin services soon. Suning and D.Phone started taking pre-orders for their telecom services on May 1.

Zou Xueyong, secretary general of the Industry Association of the Mobile Virtual Network Operators, said the mobile virtual network operators are expected to bring a "catfish effect" to the country's telecom industry, improving prices and services through competition.

"The virtual operators will help push forward reforms in the telecom industry and drive down prices of telecom services," Zou said.

However, many industry insiders remain cautious.

An executive from an MVNO, who declined to be named, said the virtual operators are not expected to bring about sweeping changes to the industry, which is dominated by three state-owned basic telecom operators -- China Mobile, China Unicom and China Telecom -- due to their unequal relations.

It might take a long time before people accept the virtual operators, he said.

The virtual operators will each need 1 million active subscribers to reach the break-even point, said an executive with China Telling Communications who declined to be named.