The Chinese government is set to open the telecoms industry to private investment as part of its efforts to improve the country's internet service '“ which it has identified as a key driver of economic growth. A notice from the Central Committee and the State Council stated that the government would be given a free rein to telecoms companies in the development of the internet.
The government has been calling for a reduction in costs in relation to telecoms fees over the last number of months '“ and reiterated that it was committed to bolstering competition by easing rules and curbing subsidies. The notice also pledged to allow venture capital firms and small interest businesses access to more freedom.
This development is the latest in a long line of efforts by the Chinese government to fuel competition in the telecoms sector. In the last two years they have initiated a number of campaigns all with the specific aim of reducing fees and increasing the speed of internet service, particularly in rural areas. One of these initiatives was the '˜Internet Plus Plan' which was announced in 2015 '“ it aims to integrate mobile internet, cloud computing, big data and Internet of Things with traditional industries in the hope that it can encourage development of e-commerce and modern manufacturing in strategic sectors.
The country's three state-owned operators China Mobile, China Unicom and China Telecom have a virtual monopoly on telecoms service. Although China's Ministry of Industry and Information (MIIT) issued 37 MVNO licenses in 2014, the virtual operators have signed up only about 20 million subscribers, a small fraction of the country's 1.3 billion mobile users.
Some have been critical of the country's mobile internet service, and it has been labeled expensive and slow. The telecoms regulator subsequently intervened and put pressure on industry players to reduce prices and improve speeds across the country. China's top three operators committed to reducing data prices by 20% and improved network speeds.
In 2016, MIIT was granted a telecoms license to China Broadcasting Network (CBN) which ultimately created a fourth player in the telecoms industry, but it is unlikely that it will speed up broadcasting-telecoms network convergence in the region.
In another sign the government is opening up the incumbents to market pressures and opportunities, China recently revised its spectrum regulations which offers hope the country's 5G frequencies can be made available via a market-based approach rather than relying on administrative approval as in the past.
According to the new Radio Regulations, which came into effect on 1 December, the country's radio frequency resources can be allocated through administrative approvals and a market-based approach, which includes bidding and auctions.