China Opening Telecoms With Cloud Centers 云计算或成为中国开放电信服务市场的突破口

By newsdoug on May 27, 2012

Microsoft plans China cloud center China’s telecoms companies have all rushed to set up new cloud computing centers, the massive data and software warehouses that allow computer users to do all their computing remotely from relatively simple desktop and laptop PCs. But now it appears that Beijing wants to develop this area so much that it’s also opening up the sector to foreign companies, with Microsoft (Nasdaq: MSFT) the latest to detail its plans for the cloud computing space in China. Media are quoting a top Microsoft global executive saying the company is applying for permission to build cloud centers in China (English article), after Microsoft said late last year it was studying such a plan for the interior city of Chongqing. (previous post) Microsoft’s entry to the space would come months after IBM (NYSE: IBM) announced in January it would help to build a massive campus near Beijing that would become China’s largest cloud computing center. (English article) From an investors perspective, these 2 developments look very interesting not only for their money-earning potential, but also because they seem to show that Beijing may finally be starting to allow foreign firms to make major investments in the lucrative Chinese telecoms services market, after years of locking them out despite agreeing to open the space under its commitments when it entered the World Trade Organization 10 years ago. This kind of opening would be consistent with recent remarks from the telecoms regulator, which said in March that the government has officially made boosting private investment in telecoms infrastructure part of its new policy. (previous post) Cloud computing would be a relatively easy area to open up to foreign investment, since right now the industry is at a very low stage of development and clearly the arrival of foreign technology and expertise from big names like Microsoft and IBM could quickly build the sector into a world-class player. Another opening of China’s telecoms services market could also come in the next year or 2 if one of China’s 3 telcos signs a mobile virtual network operator (MVNO) agreement with a major foreign telco. Such agreements have yet to come to China but are popular in other markets, and usually see a foreign telco offer its own branded service overseas using an existing carrier’s network. China Telecom (HKEx: 728) last week launched the first MVNO for a Chinese company with a partner in Britain, and I predicted that move could ultimately see the Chinese telco reciprocate by signing an MVNO that would allow a foreign telco to offer service in China. (previous post) This latest cloud development, along with the potential for a foreign MVNO in China, does seem to show that China may finally be serious about opening up its telecoms services market. Earning profits, meanwhile, could be a more difficult challenge in a market this is already quite competitive in many areas.

Bottom line: Microsoft’s plan to build cloud centers in China is the latest sign of Beijing’s intent to open its telecoms services market to foreign investment.

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