China Telecom intends to enter USA wireless market as MVNO

 

China Telecom has confirmed that it intends to enter the US wireless market as a mobile virtual network operator (MVNO) next year. Speaking to Bloomberg, Donald Tan, president of China Telecom Americas, indicated that the company plans to primarily target the Chinese-American population, as well as students and tourists who travel between the two nations on a regular basis. Tan said that his firm intends to offer handsets that can function in both countries, suggesting a tie-up with a CDMA operator such as Sprint Nextel or Verizon Wireless, as China Telecom utilises the CDMA2000 standard in its domestic market. To that end, Tan confirmed that his company is already in market trials with several potential wholesale partners, although he declined to divulge their identities.

Going forward, if the wireless service takes off, China Telecom may even consider building or buying its own wireless network in the US, with Tan commenting: ‘If the service is growing fast, maybe we can set up our own infrastructure. The money is no big problem for us’. Nevertheless, the US government’s reticence to allow Chinese telcos to conduct business in the country may yet prove to be the most significant hurdle standing in its way. As previously reported by TeleGeography’s CommsUpdate, last month Chinese telecoms equipment vendor Huawei Technologies called on the US Department of Commerce to explain why the company has been excluded from participation in the construction of a national wireless network for emergency responders. The firm was reportedly barred due to ‘US government national security concerns’, and William Plummer, a Washington-based spokesman for Huawei, told Bloomberg: ‘Notwithstanding that it is an ill-founded, ungrounded determination, it could have a chilling effect on our greater US business activities and accountability needs to be defined appropriately. No one has ever factually demonstrated otherwise, and playing Huawei as a pawn in some geopolitical game of chess is doing nothing more than threatening US jobs, investment, competition and innovation’.

Although as many as 73 companies have operated as MVNOs in the US in recent years, success in the sector is far from guaranteed, with high profile failures such as Disney and ESPN both folding their operations after expensive launches. However, TeleGeography notes that China Telecom is not the first Asian company to enter the US wireless market as an MVNO; April 2011 saw Japanese telecoms giant DoCoMo initiate its ‘DoCoMo USA Wireless’ product, which piggybacks on T-Mobile USA’s network.

(C) Telegeography

Huawei confirmed licensing deal with Microsoft over the use of Android software

Huawei discussing a licensing deal with Microsoft over the use of Android software, and may end up paying the software maker millions in patent royalty fees as it expands worldwide.

Huawei Chief Marketing Officer Victor Xu confirmed discussions are in progress, though he insists his company can defend itself in a patent lawsuit, if discussions should come to that.

"We always respect the intellectual property of key companies," Xu said. "At the moment we have more than 65,000 patents and we have enough instruments to protect our interests."

Despite having its own stockpile of patents, Huawei may not have enough power to fight back against Microsoft, which has been targeting Android phone makers worldwide as the Android OS includes more phones.

Microsoft contends the Android OS infringes on patents it owns, and moves to bring lawsuits against companies unless they agree to property license settlements.

Those settlements have cost companies millions. HTC pays Microsoft $5 per Android device. Samsung was able to bargain Microsoft down from its demands for $15 per phone to $10 a phone, under the condition that it comes out with a Windows Phone.

A licensing deal with Huawei may be lucrative for Microsoft. The Chinese company is not yet well known in the U.S., but it is the world's second-biggest network and telecom equipment supplier. Its products are used in 140 countries, according to the BBC, and many analysts believe it may soon take over Ericsson, particularly since the Swedish company recently parted ways with Sony.

Huawei is also planning aggressive growth over the next three years. It is expected to expand into the U.S., Japan and India next year, and then worldwide in 2013.

The Chinese company has picked the U.K. as its international launch point and is forecasting rapid growth, which may mean billions for Microsoft if a licensing agreement is made.

Huawei is building three design centers to expand its operations. The first will be in London, concentrating on the European market.

The initial lineup includes the Huawei Blaze and Vision smartphones and a seven-inch MediaPad tablet. These Android-powered devices are targeted toward the lower-end market, but the company is betting they'll reap big profits from them. Any profits may have to be shared with Microsoft, because of their past success on claiming patent infringement against other companies that use the Android OS in their devices.

While Microsoft has been known to threaten Android phone makers with bans if they don't work out agreements, a product ban would not benefit Microsoft nearly as much as a lucrative licensing agreement, so that threat does not normally go into effect.

Even though Huawei says it can defend itself, facing a lawsuit just as it plans to expand worldwide may hamper its momentum, so Microsoft likely will have yet another licensing partner as use of open-source Android continues to grow.

(C) Mobiledia