China has announced plans to have four telecommunication service providers running the country's fixed-line, mobile, data, and other telecommunication services in two years' time, according to the Tuesday edition of the official newspaper China Daily.
The Chinese government aims to split existing monopoly operators within both the mobile and fixed-line space into four carriers that will all offer a full range of mobile and fixed telecommunication services, China Daily said.
The integrated services offered by the telecommunication operators will promote increased competition and at the same time break up existing monopolies, said China Daily, quoting an official from the Chinese Ministry of Information Industry (MII).
But restructuring within the sector will take some time since most carriers have separate licenses for either fixed-line or mobile service, and being an integrated service provider would mean that they would need the ability to run both, the report said.
This restructuring of the telecommunication sector in China comes as a surprise to some in the industry.
"Everyone has been unbundling these businesses and here they are bundling these two things together," said Paul DiPaola, Hong Kong-based partner and vice president of technology and telecommunication at Bain & Company Inc. "(The Chinese government) has to believe that there's value to be provided to the customer in a bundled offering," he said.
"The four carriers, although a reasonable number to level the playing field, will be more complex companies to run... and they won't be the best-run companies in China as they get more complicated," said DiPaola. The latest regulation changes the telecommunication landscape in China, although the rationale behind it, which may be one of cost and customer sharing, is valid, he said.
China's largest fixed-line telecommunication carrier, China Telecommunication (Group) Corp. (China Telecom), will officially launch as two separate businesses from Feb. 12, the start of the lunar new year, a move which was disclosed by the MII in October last year.
China currently has two mobile operators, three fixed-line carriers, and a satellite operator, China Daily said.