China Telecom, the state-run carrier is reportedly investing heavily to encourage in-house innovation with setup of two internal innovation incubators in both Beijing and Shanghai, a big step for a Chinese state-run company.

According to an internal document from the largest landline operator in the planet, it will earmark about US$ 30 million (RMB 200 million) for its ‘satellite’ startup plan, through which each startup team (has at least three founding member) will be incubated by China Telecom for two years with between US$ 7925 (RMB 50,000) and US$ 15,850 (RMB 100,000) to kickstart their ideas.

As the first telecommunication operator in China, China Telecom surprisingly wasn’t being constrained by its history, tradition and huge payroll as many other Chinese state-run companies usually do, and has been shoving itself into the cutting-edge technology trends. Earlier this month, the Chinese carrier co-hosted a “Mobile Internet Apps Creative Competition 2011’” with Tencent and Motorola in an aim to attract more 3rd party developers and creative-thinking apps for its own app store Tianyi Kongjian (189store.com). Yang Xiaowei, Deputy GM of China Telecom said in a keynote during the conference that the company is to attach much importance to mobile internet in the time to come and will restructure its internal organization to bring out more innovation. As of last November, China Telecom grabbed more than 125 million subscribers under its e-surfing (Tianyi) branding while 34 million of which are 3G users. And its data services recorded a 120% rise in revenue, outrunning its SMS and MMS services.

Besides its internal-oriented incubator, the company also put aside real money as awards for prominent 3rd party developers.