Coming to America: China Telecom launching U.S. service

Despite a bad record for mobile virtual network operators in the U.S., China Telecom is moving ahead with plans to pursue an MVNO service in the U.S. starting next year. In an interview with Bloomberg, Donald Tan, the president of China Telecom Americas, said the branded service will start early next year and will target tourists and travelers who fly back and forth between China and the U.S. frequently.
The service will be priced competitively and will be built off an existing network in the U.S., most likely Sprint (s s) or Verizon (s vz). China Telecom operates on CDMA, the same wireless technology used for 3G by Sprint and Verizon. Tan said China Telecom has been in trials with different partners and expects to select a wholesaler soon. Users will get one line that works in the U.S. and one line that operates in China. Tan declined to provide more details about the upcoming service.
China Telecom’s initial bid may sound modest, but it could lead to a bigger play by China’s largest fixed-line provider and its third-largest mobile carrier. Tan said if all goes well, China Telecom may consider launching its own network in the U.S. instead of renting capacity from another operator. The company has $9.6 billion in total current assets, including about $4 billion in cash.
“If the service is growing fast, maybe we can set up our own infrastructure,” Tan told Bloomberg. “The money is no big problem for us.”
A larger infrastructure play could run into opposition in Washington, which is wary of China. The U.S. government recently blocked Chinese network equipment maker Huawei from taking part in a nationwide emergency network out of national security concerns. And foreign companies need to get an FCC waiver to own U.S. spectrum.
But first China Telecom has to prove it can make its MVNO work. Disney, (s dis) ESPN and others tried and ultimately gave up after receiving little interest from consumers. SK Telecom, another Asian carrier, tried with Helio and ultimately sold to Virgin Mobile, which killed off the brand after being sold to Sprint.
The market for people who need and want phones that can operate both in China and the U.S. is specific but also limited. But Japanese telecom provider DoCoMo has also launched its own MVNO service earlier this year in the United States on T-Mobile, aiming at tourists. It will be interesting to see if these new efforts can make this model work or if it will ultimately follow in the footsteps of other MVNOs that gave up.