China's Ministry of Information Industry says in one of its latest circulars that the basic telecom operators must not abuse their market dominating position to violate the interests of mobile value-added service providers.
In the "Circular on Implementing Credit Service and Ease of Consumption Within the Telecom Industry", MII says it will focus on seven major problems: charging and cost; marketing management; keeping service promises; technology management; cooperation management; information content; and complaints handling in regulating the behavior of basic telecom operators. MII also publicly condemned basic telecom operators for taking advantage of their market rise and for ignoring the due interests of MVAS providers.
In recent years, MVAS providers like Linktone (LTON), Kongzhong (KONG), Sohu.com (SOHU), Sina.com (SINA), Netease (NTES), China.com (CHINA), and Tom.com (TOMO) were often at the mercy of larger companies like China Mobile or China Unicom because the MVAS providers relied so heavily on the larger firms for their livelihoods. As a result of this lopsided business relationship, many MVAS companies in China have seen diminishing returns on their investments, and some have been forced to close their doors.
Kan Kaili, telecom expert and a professor from Beijing University of Post and Telecommunications, says this shows that MII's supervision of telecom operators is becoming more defined. However, others are pessimistic about the effect that the new circular may have and they believe that telecom operators' expansion into the value-added service field won't be stopped by this single circular.
Fortunately, some telecom operators including China Telecom, China Netcom and China Satcom have responded positively to the new circular and each of them has set up their own work teams tasked with following through on the circular's recommendations.