China Mobile unlikely to invest in cable

It is unlikely that China Mobile will invest resources into cable operators to fund upgrading efforts of the country's cable TV networks--and in turn, boost broadband services--because both market segments operate under different regulatory bodies.

In a statement released Monday, Ovum noted that there had been speculations that the Chinese mobile operator could potentially become a player in the cable industry. The rumors generated from China Mobile's need to have fixed network assets to complete its services portfolio, the research firm said, adding that cable operators were also looking for funds to complete their network upgrades.

Its investment in cable operators would enable China Mobile to gain ownership of a fixed access network and would provide cable operators with secure capital to upgrade their networks to support digital services, the report had noted.

However, China Mobile would have to overcome two major barriers if it was indeed eyeing the cable market, Ovum said.

"Different regulators will limit cross investment," Jane Wang, senior analyst at Ovum, said in the statement. "Indeed, for China mobile to become a major stakeholder in the cable industry, a multi-regulator approach would be required."

Wang explained that the Ministry of Industry and Information Technology (MIIT) and State Administration of Radio, Film and Television (SARFT) currently regulate the telecommunication and broadcasting had industries separately, so China would require a multi-regulator body such as the converge regulator in Korea to oversee players offering both telecom and broadcasting services.

However, both government agencies would seek to protect their own interest and those of their industries, she noted.

The Ovum analyst explained that competition between the two entities can only be resolved if the central government adopted a national broadband network plan similar to that in Australia, but such efforts were not outlined in China's 12th Five-Year Plan (2011-2015) released in March this year.

She added that China Mobile's 2011 capex plan had not focused on significant investments in fixed infrastructure and services, and had instead placed prominence on investments in its mobile network.

As a listed company, China Mobile would need to seek stakeholder agreement for the large-scale investment that would be required in building a national cable network, Ovum said. It noted, however, that small-scale cooperation between China mobile and cable operators had been seen in some cities or provinces.

"Cross-industry investment has rarely been allowed among state-owned companies and China Mobile shows no sign of such investment in the near future," Wang said.

Asked how this would affect the mobile network industry, she told ZDNet Asia in an e-mail that the Chinese operator would continue to focus on its telecom business--mainly, in the mobile realm--and would dominate the country's mobile business.

"China Mobile will keep working with cable operators to offer television-related services because the cable operator controls the television content and license," she explained.

"However, TV-related business is just a kind of value-added business for China Mobile, not the major source of China Mobile's revenue."