MIIT grants licenses for virtual telecom network services
July 31, 2018 Category China News Round-up, Weekly
The Ministry of Industry and Information Technology (MIIT) granted licenses to 15 companies to run virtual telecom network services. A virtual network operator is a provider of management services and a reseller of network services from other telecommunications suppliers, that does not own the telecommunication infrastructure. The move signals that virtual telecom services are officially recognized after five years of pilot operations. Such initiatives allow companies to offer telecom services by piggybacking on the infrastructure of China’s big three state-owned telecom carriers: China Mobile, China Unicom and China Telecom.
It is part of a broader push by China to inject new vitality into the multibillion-dollar telecom industry by attracting private capital and promoting cross-industry partnerships. Alibaba Group, Xiaomi and JD are among the 15 companies that received licenses. They are the first batch of players that have inked cooperation agreements with China Unicom. As of December 2017, China had more than 60 million virtual network service subscribers, accounting for 4.1% of the country’s total number of mobile users. As of 2017, 42 companies were running trial virtual network services. The industry has already attracted direct private investment worth CNY3.2 billion, and has helped to create nearly 60,000 jobs. Chinese internet companies aim to enter the virtual telecom sector to attract new users.
China has been ratcheting up efforts to revamp the telecom sector, which has long been dominated by state-owned players. Last year, China Unicom pressed ahead with its CNY78 billion mixed-ownership reform by attracting Alibaba, Tencent, Baidu and other companies as investors, the China Daily reports.
Meanwhile, China’s three major telecommunications network operators are also joining forces to increase the use of blockchain as part of the Trusted Blockchain initiative of the China Academy of Information and Communications Technology (CAICT). “In the next three to five years, we can expect to see more than 60% of telecoms services use blockchain technology,” said former Huawei engineer Allen Li, the co-founder of Hong Kong-based blockchain start-up QLC Chain. Blockchain helps telcos lower operational costs, including for user identification, billing and content delivery while also improving network security.
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