China Telecom to give the U.S. wireless business a shot
The Chinese telecommunications giant tells Bloomberg that it wants to launch a service in the U.S. to attract Chinese Americans and tourists.
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China Telecom wants to go where Walt Disney and ESPN couldn't: the U.S. wireless business.
The Chinese telecommunications provider wants to break into the U.S. market with its own service next year, the company told Bloomberg BusinessWeek. The company intends to go after Chinese Americans and tourists with its offer, which would provide one line for use in the U.S, and another that would work in China.
Rather than build its own network, it plans to lease capacity from another carrier, although the company declined to specify to Bloomberg who the potential partner would be. Traditionally, Sprint Nextel has been the most willing wholesale partner, though any of the carriers could work with China Telecom.
The model is a callback to similar wireless resellers, known in industry speak as a mobile virtual network operator. Previously, major brands such as Disney and ESPN attempted to use their brand to push their own wireless service, only to fold shortly after. Korean telecommunications giant SK Telecom even tried through its Helio joint venture to attract Korean Americans, but that brand was also swallowed up and quietly put down.
Likewise, China Telecom could face similar challenges as it goes after customers in an already ultra-competitive market. The company declined to comment on pricing, only saying it would be competitive.
Still, ethnic-specific services have proven to work in some situations, such as Hispanic-focused Movida Cellular, which has survived many reseller busts.
China Telecom is China's largest provider of landline service, but is only No. 3 when it comes to the faster growing--and more lucrative--wireless business.
Eager to get into the U.S., the company expressed a willingness to build its own network if its initial wholesale business works.
The company certainly has the size for it--the company has more than 190 million wireless and wireline customers, eclipsing the largest U.S. telecommunications companies.
It's unclear whether China Telecom would be able to get the necessary spectrum to build a network, or whether the U.S. government, which has been nervous about Chinese encroachment by businesses, would approve such a project.