China Mobile Chases Fixed-Line Broadband 中国移动有望获固网牌照

By newsdoug on June 1, 2012

China Mobile moves in on fixed-line broadband A steady stream of news has been coming from a broadband conference taking place in Beijing this week, including reports that the fixed-line broadband market could soon get a healthy dose of new competition with the entry of wireless giant China Mobile (HKEx: 941; NYSE: CHL) into the mix. (Chinese article) I’ll admit that I was never really clear why China Mobile had never previously entered the lucrative market for fixed-line broadband services, which is now dominated by its 2 main rivals China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE CHU), who offer services over their legacy networks inherited from the break up of China’s former fixed-line phone monopoly. After reading the reports, I’ve learned that China Mobile was never formally licensed to directly offer fixed-line broadband and instead was only allowed to offer such service through its China Railcom unit, the former telecoms unit of China’s national rail operator that China Mobile took over as part of an industry restructuring 3 years ago. Apparently that restriction was preventing China Mobile from getting many customers for its fixed-line broadband service, according to the reports. It looks like that could soon change and China Mobile could finally get the license it’s seeking to offer fixed-line broadband services directly. The biggest new factor in the equation is the ongoing anti-monopoly investigation launched last year by the powerful National Development and Reform Commission (NDRC) into China Telecom and Unicom over their fixed-line broadband service. (previous post) China Telecom and Unicom have taken steps to improve their broadband services since then, but the NDRC would certainly be pleased to see another major new player like China Mobile come into the space. What’s more, China is in the process of consolidating its many regional cable TV networks into a single operator, which could offer an instant wired-line platform for China Mobile to offer its service over. We saw signs last year that China Mobile was looking for just such a tie-up with the new cable TV operator, and broadband Internet service could be one of the easiest and most logical products for it to launch in such a tie-up. (previous post) Lastly, China Mobile has new top leadership following the recent retirement of its long-serving chairman, and those leaders are showing early signs of taking more aggressive steps to jump-start the company’s flagging growth with just this kind of initiative. If things keep moving in this direction, which looks likely, I predict we could see China Mobile announce a tie-up with the new national cable TV operator as soon as year-end, and for it to also announce a new fixed-line broadband license around the same time.

Bottom line: China Mobile could tie-up with the country’s new national cable TV operator as soon as year-end, and launch a new fixed-line broadband service soon after that.

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