Illustration: Peter C. Espina/GT

A campaign to bring private money into China's telecoms sector has been in the headlines twice over the last two weeks, reflecting a broader campaign to inject new life into traditional sectors like banking and energy that are dominated by large and often slow-moving State-run firms.

One headline came late last week, when a media report said that 20 million new phone numbers would be injected into a year-old program allowing private companies to sell mobile services. That followed even bigger news a week earlier, when media reports said the telecoms regulator hoped to allow private investors to build domestic telecoms network infrastructure for the first time.

The central government should be commended for its efforts to inject new private sector competition into the market, which could help China become a global telecoms innovator rather than its current status as a follower. The central government should consider accelerating the campaign to help reach its longer-term goal of more sustainable growth through innovation, and could even take the next logical step of allowing foreign money into the market.

China's telecoms services market has evolved rapidly over the last 20 years, following the government's break-up of the former industry monopoly to create the current landscape of three large carriers - China Mobile, China Telecom and China Unicom. But one thing that remained the same until recently was the large-scale exclusion of investment by private companies due to security concerns.

That has begun to change over the last two years with the sudden rise of "over the top" (OTT) apps like Tencent's wildly popular WeChat, which have been able to provide telecoms-based services routed over network infrastructure operated by the three big carriers.

As private companies brought new energy to the sector, the telecoms regulator started rolling out its own policies to actively welcome these more innovative players. Its first big campaign centered on a program that allowed private companies to sell mobile subscriptions and related services under their own brands by leasing network capacity from the three big carriers.

That program has seen the creation and licensing of 42 virtual network operators (VNOs), which began launching services around this time last year, including such big names as e-commerce giants Alibaba Group and JD.com Inc, as well as online video giant Youku Tudou and smartphone sensation Xiaomi. One obstacle to the program was the State-run carriers themselves, which sometimes found ways to impede progress in a bid to slow the introduction of new competition.

Now the latest reports say that China Unicom has just released 20 million phone numbers to its VNO partners, removing one potential obstacle to their quick expansion. The Ministry of Industry and Information Technology (MIIT) assisted by releasing at least 30 million new phone numbers to the three big carriers as a group. The reports point out that China Unicom has been the most aggressive in developing its VNO business, in contrast to slower movement by the other two carriers.

But the bigger news for the industry came a week earlier, when media reports said the MIIT hoped to let private investors build new broadband services infrastructure. The regulator would be making the move after years of frustration at the lack of progress in development of China's broadband networks under the duopoly of China Unicom and China Telecom. That pair were found to be engaging in anticompetitive behavior in 2011, but have done relatively little to change since then.

Initial details about the MIIT's shift were mostly technical and involved targets for boosting the data speeds of broadband networks. But the bottom line was that it believes it could achieve those goals by allowing more profit-oriented private investment into the sector, providing some needed competition for the established carriers.

The MIIT's broader moves to open up the telecoms sector are being driven at least partly by lack of innovation by China's big three carriers, which has left the country as a global laggard in the space despite its status and the world's largest telecoms market with 1.3 billion mobile subscribers. These opening steps are positive and could shake up the market, but are often slow and take years to actually implement.

As China's economy starts to slow and the central government tries to develop more service-oriented industries, the MIIT should consider accelerating this opening to bring reforms to the market more quickly. It should also consider allowing in big foreign names, which have valuable experience to offer and are far more interested in earning profits than engaging in the kinds of practices that have raised security concerns in both China and the West.

The author writes about China's company news at www.youngchinabiz. com. bizopinion@globaltimes.com.cn