China plans to conduct a pilot project for domestic private companies to offer repackaged mobile services to users, which analysts said would be a decisive step in the opening of the nation's basic telecom service market.

The Ministry of Industry and Information Technology has published draft proposals on allowing Chinese private companies to buy mobile network resources from three telecom operators.

The proposed two-year trial allows private enterprises to rebrand the mobile services and sell them to customers.

The ministry issued the draft on Tuesday and is seeking public feedback until Feb 6.

"The ministry aims to encourage, support and guide private capital flowing into the telecom industry," said the draft.

It also pointed out the trial project seeks to explore effective models and form regulatory policies to boost competition and service quality in China's mobile market.

Companies that are interested in participating should send applications to the telecom authorities during the first year of the project, the draft said.

Existing Chinese telecom operators, including China Mobile Ltd and China Unicom (Hong Kong) Ltd, have to cooperate with at least two private companies each during the trial period.

China has long been discussing opening its basic telecom service market, which contains businesses such as telecom network operations, call services and broadband connections. However, State-owned telecom carriers still have a tight hold on the market. Private companies and foreign enterprises conduct limited business focusing on value-added telecom services.

"The government's draft is a milestone, which will help to create a more open and healthier telecom industry in China," said Ji Chendong, a telecom analyst at KPMG China. The move breaches China's current telecom monopoly and will allow non-State-owned companies to become virtual network operators, Ji said.

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