Light Reading
Planned spin-off is another sign of change in the Chinese telecom industry.

China Mobile to Form Content JV

Robert Clark
News Analysis
Robert Clark
8/27/2014
50%
50%

China Mobile is planning to spin off its content businesses into a new joint venture (JV) partnership with a private company, signalling the latest in a series of changes to the country's tightly controlled telecom sector.

It's not the first such "hybrid" JV in Chinese telecoms -- China Telecom Corp. Ltd. (NYSE: CHA) established one with Netease a year ago -- but it's the first for the giant China Mobile Ltd. (NYSE: CHL), which now has more than 790 million customers, making it a bellwether for the Chinese industry.

China Mobile will tip its reading, games, video, animation and location-based services into the new entity once it has found a partner. Combined, these yielded more than 1 billion Yuan Renminbi (US$162 million) in revenues in 2013.

While that's just a fraction of the company's total business -- it generated RMB325 billion ($52.8 billion) in revenue in the first six months of this year -- the move is just one more sign of reform of non-core telecom services in China.

China has just three state-owned operators to serve its 1.3 billion population. The government holds them close -- senior executives are Communist Party appointees and hold the equivalent rank of vice-minister. Since taking office nearly two years ago, the Xi Jinping administration has set about making the state sector more efficient, while still maintaining ownership and control.

The biggest telecom reform has been the issue of 25 MVNO licenses to private companies, including online retailers Alibaba, Gome and JD.com. Despite high wholesale rates and stringent targets, there's no shortage of enthusiasm, with 200 companies applying for licenses.

The industry regulator, the Ministry for Industry and IT (MIIT), has also talked of introducing private investment into wireline broadband access, though so far it has made no firm decisions on the matter.

The MIIT has also persuaded the three operators to put their mobile basestations into a single company, a cost-saving move for telcos facing revenue erosion and rising network costs. (See Chinese Operators Form Tower JV.)

Additionally, the MIIT has relinquished control over retail pricing. It will still hold the final say, but operators will be allowed to adjust prices without first needing permission.

While these moves are unremarkable elsewhere in the world, they amount to a minor industrial earthquake in China, where consumers complain frequently about high prices, slow data speeds and the generous salary packages of telco executives.

Despite the reforms, there is no sign that authorities will lift the effective ban on foreign direct investment. Rather, the current scare over NSA snooping, and the apparent targeting of US IT firms by regulatory agencies, make such a move even less likely.

But China Mobile will be hoping that its public-private JV will be more successful than China Telecom's effort. Its partnership with Netease to offer an OTT-style messaging service has had no success at all in stemming the loss of business to WeChat. (See China Catches OTT Fever.)

— Robert Clark, contributing editor, special to Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
Connecticut Cities Crowdsource Gigabit Nets
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/15/2014
Pics: LR's Women in Telecom Breakfast
Sarah Reedy, Senior Editor, 9/16/2014
Like Us on Facebook
Twitter Feed