China to Issue Mobile Virtual Network Operator Licenses.

It is reported that Chinese authorities will release licenses for mobile virtual network operators (MVNO) around next June. License-holding companies will be allowed to run basic telecom businesses by renting infrastructure from telecom operators or even through the Internet. Rumor went further that Tencent would be one of the first to obtain such a license. What’s for sure is MIIT, Ministry of Industry and Information Technology, confirmed in July that regulations on opening eight “basic telecom businesses” to private investments was under development .

I met with an investor from the U.S. back in May 2009. It was his first time to visit China and told me he thought Tencent should add Skype-like voice-calling service to its QQ IM. I had to tell him the big three state-owned telcos wouldn’t be happy to see a private company doing voice services (disclusure: I was working at Tencent as a tech reporter then). Back then only telecom operators were authorized to run phone calling and other telecom services.

MIIT would go after illegitimate internet voice-calling businesses. A handful emerged then, such as the well-known UUCall, had to stop their services all together. In some areas of China, local divisions of operators would even cut off users’ internet connections when finding anywhere the Skype voice service was in use.

That’s still true today, in theory. But some unstoppable forces turned out to have made radical changes. As smart phones and 3G networks became widely available, internet companies, big or small, started developing mobile apps for Google’s Android Market or Apple’s App Store.

Among them are a number of voice-related ones, including voice messaging apps, such as Tencent’s Weixin (or WeChat), Xiaomi’s Mi Talk and a handful others. Tencent’s Weixin, in short, is a mobile QQ added with some voice messaging and location-based features. Its popularity triggered the argument that it can replace phone calls sooner or later.

It would be more than voice calling if the rumor turned out to be true. In 2G times, QQ services were widely consumed by mobile phone users, through operators and sharing revenues with them. With MVNO licenses, internet companies who run a variety of services don’t have to share revenues of sales of mobile books, music or other value-added services with operators – so far China Mobile is still the big brother tolling the gateway.

Then existing telecom operators could only make money from data and leasing infrastructure. But by far the big three telecom operators make the majority of revenues from basic telecom services and can hardly make a profit from 3G, though they have gained a huge user base.