Suning to ring in the changes with telecom sector move

Suning, which boasts the country's largest number of appliance sales, is poised to apply for an MVNO license.

To ensure that it will be among the first batch of candidates to obtain the regulatory green light, the company set up a working group for the job, according to an e-mail statement.

The electronics conglomerate believes it is well positioned to meet the application requirements, which include experience of telecom-related work, consistent and long-lasting profitability and a team of 50 people to oversee the business.

"We have been housing booths of (the three big) telecom operators in our 1,700 outlets across the country for about a decade. We are familiar with the workings of the telecom business," said Sun.

He said that the license will allow the company to "think outside the box" by attaching value-added service packages to the smartphones it sells. He did not elaborate.

Essentially, MVNO business consists of managing two key relationships - mobile network operators, or MNOs, and end-users, said Xu Zhen, a telecom specialist with d1net, an information technology portal.

"It means that MVNO business is mostly a market-segmentation game for mature marketplaces. They must have existing valuable assets to leverage more efficiently than their respective host-MNOs do, in order to add value to the overall mobile-services supply chain," said Xu.

To succeed, MVNOs need to possess an existing distribution system and a solid customer base on which to perform the cross-selling of products and loyalty programs. These have put companies such as Suning in an advantageous position, said Chen.

In addition, it is essential to have a brand with renowned business prestige or a high level of recognition among customers. Having valuable audio-visual content or innovative applications delivered on mobility is a plus, he added.

The policy "will not reshape the industry because it helps expand the pot for host-MNOs' resources, at least for now", said Chen.

However, there is still concern that the move will herald radical changes in the telecom landscape, including the introduction of Internet phone, which largely reduces dependence on voice businesses provided by traditional carriers, Xu noted.

"Because of the possible resistance from host operators, MVNOs should not count on profitability in the short run. Instead, they should leverage the customer base to boost revenue in other business segments," he said.

hewei@chinadaily.com.cn

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