Will the US let China Telecom run an MVNO?

China Telecom is planning a wireless MVNO in the US next year, Bloomberg reports.

It is already testing the service with unnamed carrier partners. The question is: will the US allow it?

We’re bound to hear noises about China Telecom as a security risk. Given that the Chinese firm will be primarily selling SIM cards to students and tourists, that is hardly relevant.

But we should expect a debate about the fairness of granting entry to a company whose own market is effectively closed.

Congress seems to have some interest in reciprocity. The Chinese Media Reciprocity bill -  which insists on a balance of state media workers between the two countries –has just hit the floor of the House.

Given the massively larger Chinese state media, that bill seems primarily about scoring a political point (some 650 Chinese state media staffers work in the USA; only two such US journalists operate in China).

But the lack of telecoms reciprocity is a real issue requiring a thought-out position.

The US allows direct foreign investment at all levels of the telecom market.

In China, not even privately-owned Chinese firms are permitted to build or operate infrastructure. 

Despite commitments China made it when entered the WTO ten years ago, foreign direct investment in telecoms is effectively ruled out.

Nominally, foreign firms may own up to 50% of value-added services providers. But as AmCham noted in its annual review in April this year, they may only partner with ventures with existing state-owned telecom providers.

“In addition, China narrowly defines VAS as value-added network service licensing. This narrow definition is not only inconsistent with accepted international practice but also limits market entry for US telecom providers.”

In August, China Telecom was also reported to have been mulling an MVNO in the UK, though nothing seems to have come of it.

It maybe that these are part of a strategic push by Chinese telcos to expand abroad, or kite-flying exercises by an assertive China, or both.

There are some signs that a push is on. BT’s Asia-Pac chief Kevin Taylor told a Hong Kong conference last week that China Mobile executives were doing the rounds in the UK “insisting that the China market is open.”

In truth, it's unlikely Washington will go along with this. What's interesting is that China Telecom appears unaware of any irony. But if it keeps this up, 'reciprocity' will become the next telecom buzzword.