Last week, Xiaomi launched their own carrier network, offering consumers a package deal with phones and a sim for a starting price of approximately $10 USD. While it may seem ambitious to take on the state telecommunication companies at the same game, the truth is that it’s part of a government plan to promote innovation and competition in the industry.

Chinese authorities issued pilot operation licenses to eleven ‘mobile virtual network operators’, or MVNOs, at the end of 2013 and has gradually increased the number of virtual carriers to 42.

Instead of having these carriers compete with the state however, they are merely buying bandwidth from the existing government telcos, and despite a concerted push to get the small players of the ground, the numbers don’t look good for most of the existing MVNOs. And at the end of the year it seems many will be shut down when the pilot licenses are reassessed.

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Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.