Mobile virtual network operators (MVNOs), entities that rent other companies' networks to provide phone services, struggle in China as they failed to gain positive development from the country where it was previously predicted to flourish.
As reported in Shanghai's China Business News, there are 26 MVNOs in operation, with a total of more than 8.2 million subscribers. The government gave licenses to a total of 42 MVNOs for the trial period.
The number of subscribers, however, accounted for less than 1 percent of the total mobile service subscribers in China, which tallies up to 1.3 billion. The sector also failed to meet the earlier forecast for the current year, which is 50 million subscribers.
As the trial program ends this year, more firms are expected to provide service since the government will be holding a review regarding the issuance of the formal licenses.
Included in the list of firms that made progress in the MVNO sector are home appliance retailer Suning, game website Suzhou Snail Digital Technology, and consumer electronics retailer Aisidi.
Suzhou Snail Digital Technology's Snail Mobile has attracted 2 million subscribers, the newspaper reported.
According to Zou Xueyong, Industry Association of the Mobile Virtual Network Operators secretary-general, the competition among the firms in the sector is centered on price. China Business News also said that cheaper mobile service offers do not aid in establishing a group of loyal subscribers.
Meanwhile, another issue faced by MVNOs involve the wholesale cost of renting a network. This expense is particularly higher than the normal network services' retail prices.
"None of the MVNOs have suffered losses, but they are not really making any money and there is no incentive for them to build the market," Mo Guangwei, a telecom sector expert, shared.