China to Hold 2-Year Trial for Private Mobile Service Providers

China will conduct a trial for private companies to offer repackaged mobile services to users that will end the monopoly of state-controlled carriers in the country’s phone services industry.

The Ministry of Industry and Information Technology has proposed a two-year trial to allow Chinese non-state owned companies to purchase mobile network bandwidth from existing operators and rebrand the services to end users, it said in a posting on its website today. The ministry is seeking public feedback on the proposal till Feb. 6.

China Mobile Communications Corp., the nation’s largest wireless carrier, and all other phone and broadband Internet carriers in the world’s biggest mobile-phone market by users are state owned. The government will encourage and introduce private capital to boost competition and service quality in the telecommunications industry, the ministry said on its website.

“This new measure is a moderate attempt to break the monopoly,” said Eric Qiu, an analyst at Guosen Securities Co. Ltd. in Hong Kong. “China has talked about opening up its telecommunications sector and breaking the monopoly for a long time, but there haven’t been many detailed policies.”

China’s State Council, the country’s highest government body, said in May 2010 it would encourage private investment in the telecommunications industry and promote competition.

Foreign investment in the country’s phone and broadband Internet carriers is limited to minority holdings in publicly traded units listed in Hong Kong.

China Mobile Communications, which had a total of 707 million mobile subscribers at the end of November, is the parent of Hong Kong-listed China Mobile Ltd. China United Network Communications Group, parent of Hong Kong-listed China Unicom (Hong Kong) Ltd., was second with 236 million mobile users, according to data compiled by Bloomberg.

China Telecommunications Corp., parent of Hong Kong-listed China Telecom Corp., had 158 million wireless users.

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