Within a year, people in China may be able to apply for fibre-to-the-home (FTTH) service from China Mobile.
This is not a mistake. Multiple reports indicate the country’s largest wireless operator is close to obtaining a broadband licence and is quietly preparing to build optical transport and access networks.
Speculation began in late 2011 that the Ministry of Industry and Information Technology (MIIT) was revisiting the concept of a “full-service” operator as a way to revive a broadband market that has shown little growth.
At present, China Telecom and China Unicom control roughly 85% of the nation’s broadband access and revenue. The remainder is held by regional broadband wholesalers and cable television operators.
The current impasse stems from MIIT’s 2009 policy (Regulation No. 686), which restricted China Mobile to wireless services (including 3G and Wi-Fi). Fixed broadband could be provided only through Tietong, a fixed-line operator China Mobile acquired the year before.
Regulation 686 expired in 2011 and MIIT did not renew it or issue immediate follow-up measures. Instead, the ministry initiated an internal review of market conditions and service structures.
That review concluded several factors encouraged a policy change: China Mobile’s weak 3G growth, widespread complaints about a broadband monopoly—China Telecom dominant in the south and China Unicom in the north—and appeals from local operators to relax entry restrictions. Those findings prompted MIIT to let 686 lapse without renewal.
Although China Mobile’s revenue exceeds the combined revenue of China Telecom and China Unicom by a wide margin, its growth has slowed in recent years. GSM expansion is tapering off, and the path for TD-LTE remains uncertain.
China Mobile has pursued several strategic initiatives—building a large public Wi‑Fi network, developing mobile payment services, and creating a revenue-sharing arrangement with internet TV operator CNTV—but none have yet delivered major success.
Strategic Moves
Rather than waiting for formal broadband rights, China Mobile has already acted. In 2010 the company launched two tenders for passive optical network equipment to support about three million lines.
While that number is small compared with the 15 million lines ordered by China Unicom and 19 million by China Telecom, the purchase signalled China Mobile’s intent to secure a position in the lucrative FTTH market. The company accelerated purchases in 2011 to cover about eight million lines, and orders rose another 40% in 2012.
The broader broadband landscape has also evolved in ways that favour China Mobile. Early in 2012, China Telecom announced the “Broadband China, Fiber Cities” initiative to upgrade access speeds and extend optical fibre to homes nationwide.
China Unicom adopted a similar agenda, and the government elevated fibre rollouts to a national priority. Urban residents stand to gain home download speeds of 20–100 Mbps, while operators could capture significant new revenue from a large and growing broadband subscriber base.
Xi Guohua, chairman of China Mobile and a former senior regulator at MIIT, publicly urged the government to end the “asymmetrical” policy that restricted China Mobile and to grant it a full-service licence. His statements provoked strong objections from China Telecom and China Unicom, which fear a disruptive price war.
MIIT, however, appears willing to consider change. An internal MIIT source reported in mid‑2012 that the ministry had “basically” agreed to lift the broadband ban on China Mobile, with the timing of an official announcement being the remaining question.
While bureaucratic deliberations continue, competitive dynamics are already shifting. In Shanghai, for example, China Mobile began marketing broadband packages at prices matching China Telecom’s offers.
Limited Impact and Challenges
Why has the government hesitated to formally issue a broadband licence that could stimulate the market? Concern centers on the possibility that China Mobile could quickly become a dominant player—though many industry observers believe that is unlikely, given how entrenched China Telecom and China Unicom are in fixed broadband infrastructure.
As a policymaker, MIIT must also consider countermeasures to preserve market balance if China Mobile expands into fixed broadband in earnest.
China Mobile would face substantial practical challenges even with a licence. By mid‑2012 China Telecom and China Unicom had passed approximately 65 million households with optical cable, and that number was growing rapidly. Competing to reach these homes would be an uphill battle for China Mobile.
Most analysts therefore suggest China Mobile could be better served by targeting niche segments—such as large enterprise customers—rather than pursuing mass residential FTTH deployments.
China Mobile has experimented with hybrid approaches, combining fixed broadband trunks from Tietong with high‑speed wireless access, including public Wi‑Fi hotspots. While this model can extend reach, it may struggle to support very large subscriber volumes or sustained high traffic loads, and concerns remain about performance and security during peak periods. Fundamentally, it remains largely a wireless access solution rather than true FTTH.
The operator has also explored using cable TV networks to deliver broadband, but that approach presents technical and revenue‑sharing challenges that complicate its viability.
Will FTTH reshape China Mobile’s business? Xi Guohua has downplayed that prospect. As a former MIIT regulator involved in crafting Regulation 686, he notes that China Mobile already offers fixed broadband via Tietong and would likely adopt a selective, strategic approach to any expanded broadband role rather than a broad, all‑out push.
Xi has reassured industry rivals that China Mobile does not intend to trigger a destructive price war. “Mobile services generate substantial returns for us, while fixed services are relatively low margin, so it is unlikely we would plunge into a vicious price war,” he said.
So how would China Mobile deploy a broadband licence if granted? According to Xi, the operator would prioritise areas that complement its mobile business: building regional transmission networks to carry data among mobile base stations, developing internet infrastructure to reduce dependence on competitors’ networks while creating new revenue streams, and delivering high‑speed connections tailored to high‑end enterprise customers.
In sum, while a change in regulation could allow China Mobile to enter the FTTH market more directly, numerous strategic, technical and market‑structure obstacles mean the operator is likely to pursue measured, targeted expansion rather than an immediate, nationwide push into residential broadband.