China Allows Alibaba, Other Private Companies to Offer Telecom Services

In a move that signals its seriousness about reforms, China has awarded licenses to 11 private companies, including e-commerce giant Alibaba Group Holding Ltd., to run mobile telecommunications businesses based on services leased from China's three state-run carriers, reports the Wall Street Journal.

 

The Chinese Communist Party's leaders last month called for a greater role for private capital in a number of industries. The government has said it would allow a variety of companies to apply for banking licenses as part of an effort to shake up lending and give consumers and smaller business greater access to capital, though it hasn't released details.

 

Among the companies that won licenses is Alibaba's closest rival Beijing Jingdong Century Trading Co., which runs the popular JD.com e-commerce service.

 

In its statement, the Ministry of Industry and Information Technology said the new plan would "stimulate competition" in the telecom industry and "provide users with more choices."

 

The 11 newly licensed companies would lease mobile services from state-run telecom providers and package them as their own, potentially offering discounts and mobile data packages that come with the purchase of items like smartphones.

 

The Ministry of Industry and Information Technology said competition would be "fair," but didn't elaborate on the terms.

 

The other companies receiving licenses were DiXin Tong Inc., Bashi Zaixian Ltd., Zhejiang Lianlian Technology Co., Telling Telecommunication Holding Co., Funtalk China Holdings Ltd., Beijing Huaxiang Lianxin Technology Ltd., Beijing Bewinner Communications Co., Soshare Network Technology Co. and Telephone World Digital Group.

 

Quoting analysts, the Journal said the success of virtual telecom providers would depend on their leasing terms. State-run telecoms could limit the size of competitors by offering limited bandwidth and charging high rates.

 

 

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