China Mobile Ltd. (ADR) (CHL), China Telecom Corporation Limited (ADR) (CHA), China Unicom (Hong Kong) Limited (ADR) (CHU): More Wireless Competition in China?

On the other hand, partnering with a popular over-the-top, or OTT, company that provides broadband content delivery, such as audio and video, outside the control of an Internet service provider, could bring more subscribers to the network — but at some risk, depending on which direction the revenue from that increased traffic would flow.

Popular Chinese messaging service operator Tencent, and Chinese search engine Baidu.com, Inc. (ADR) (NASDAQ:BIDU) , according to Brown, would be able to use being an MVNO to their own advantage, as well as providing upside to the mobile network they would use.

The OTTs would gain from not having to rely on advertising revenue in an industry seeing expanding OTT competition for that advertising money, and would directly benefit from subscription fees.

As for the operators, with the increasing content delivery speeds offered by the Chinese operators’ future LTE networks, having a good working relationship with the major OTT companies and their content, especially video content, will become critical.

China Mobile has over 720 million wireless subscribers, a huge lead over No. 2 China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) with 239 million, and No. 3 China Telecom with 162 million. It is possible the addition of MVNOs into the mobile marketplace has the potential for shaking up the wireless status quo in China.

However, that is not a view that Fitch Ratings took last January. It felt that the MVNO business model has had only limited success globally, and that its introduction into China would have little effect of competition. But, Fitch cautioned, forcing the Chinese incumbent mobile operators to open up their networks to MVNOs would put those operators at risk of more government regulation.

The article More Wireless Competition in China? originally appeared on Fool.com and is written by Dan Radovsky.

Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool recommends Baidu and Google. The Motley Fool owns shares of Baidu, China Mobile, and Google.

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