China Telecom reveals US MVNO plans

10 Nov 2011

China Telecom has confirmed that it intends to enter the US wireless market as a mobile virtual network operator (MVNO) next year. Speaking to Bloomberg, Donald Tan, president of China Telecom Americas, indicated that the company plans to primarily target the Chinese-American population, as well as students and tourists who travel between the two nations on a regular basis. Tan said that his firm intends to offer handsets that can function in both countries, suggesting a tie-up with a CDMA operator such as Sprint Nextel or Verizon Wireless, as China Telecom utilises the CDMA2000 standard in its domestic market. To that end, Tan confirmed that his company is already in market trials with several potential wholesale partners, although he declined to divulge their identities.

Going forward, if the wireless service takes off, China Telecom may even consider building or buying its own wireless network in the US, with Tan commenting: ‘If the service is growing fast, maybe we can set up our own infrastructure. The money is no big problem for us’. Nevertheless, the US government’s reticence to allow Chinese telcos to conduct business in the country may yet prove to be the most significant hurdle standing in its way. As previously reported by TeleGeography’s CommsUpdate, last month Chinese telecoms equipment vendor Huawei Technologies called on the US Department of Commerce to explain why the company has been excluded from participation in the construction of a national wireless network for emergency responders. The firm was reportedly barred due to ‘US government national security concerns’, and William Plummer, a Washington-based spokesman for Huawei, told Bloomberg: ‘Notwithstanding that it is an ill-founded, ungrounded determination, it could have a chilling effect on our greater US business activities and accountability needs to be defined appropriately. No one has ever factually demonstrated otherwise, and playing Huawei as a pawn in some geopolitical game of chess is doing nothing more than threatening US jobs, investment, competition and innovation’.

Although as many as 73 companies have operated as MVNOs in the US in recent years, success in the sector is far from guaranteed, with high profile failures such as Disney and ESPN both folding their operations after expensive launches. However, TeleGeography notes that China Telecom is not the first Asian company to enter the US wireless market as an MVNO; April 2011 saw Japanese telecoms giant DoCoMo initiate its ‘DoCoMo USA Wireless’ product, which piggybacks on T-Mobile USA’s network.