Telecommunication News
- Mobile carriers seek new revenue channels as voice income falls
Date: 27-Dec-2007 Sources: (Xinhua Online)
BEIJING, Dec. 26 -- The key word for the Chinese telecommunications market in 2007 is delay - with long-awaited events, 3G license issuance, carrier asset restructuring, China Mobile's domestic stock debut and commercial use of the home-grown 3G technology not taking place.
Mobile was another keyword. Mobile carriers have been chopping away at the market shares of fixed-line operators, which may help China Mobile tilt the balance in its favor after its almost dominant position in the market.
Generally speaking, the carriers spent less this year but they also expanded aggressively in emerging sectors, such as rural areas and broadband.
By the end of October, the Chinese mainland's mobile phone user base totaled 531.44 million, adding 70.38 million in the first 10 months. But fixed-line users hit 370.68 million, adding only 2.89 million in the same period, according to the Ministry of Information Industry.
'It's an unavoidable trend that the fixed-line carriers will face a drop in users on account of the handset's popularity and a fall in mobile phone fees,' Hong Kong-based KGI Group said in a report last month.
The country's mobile user base will grow 10.2 percent annually until 2010 while the fixed-line subscriber number will drop one percent annually. The ratio between mobile and fixed-line users will reach 68 to 32 in 2010, from 61 to 39 this year and 51 to 49 in 2003, according to KGI.
The Chinese mainland's mobile penetration rate was only 39.9 percent by October, only half of Singapore, China's Hong Kong, and Malaysia. That means a huge potential for mobile carriers, Wang Zhiguang, Oriental Securities' senior analyst, said in a note.
China Mobile, which boasts two-thirds of domestic mobile users, benefits most from the trend.
The telco's revenue accounted for about 50 percent of the domestic telecommunications market and its net profit was even higher.
'It (China Mobile) has broken the line of fair market and has become in fact a monopoly,' said Sandy Shen, a Shanghai-based analyst at Gartner. 'It has made the government consider an industry restructuring.'
Speculation is rife that China Unicom's two mobile networks will be merged with China Netcom and China Telecom and the government will issue 3G, or third generation, licenses to the three mobile carriers.
The two new merged mobile carriers, however, are not as competitive as China Mobile, according to KGI.
Instead, China Unicom, China Netcom and China Telecom will possibly be merged as one to compete with China Mobile, and the so-called merger will take place after the Beijing Olympic Games next year, according to KGI.
'The new merged firm has a strong fixed-line phone network but its mobile business, mainly from China Unicom, is not strong enough. The result will be that the country will have two monopoly carriers - one in fixed-line and the other in mobile,' Shen said.
It is a dilemma for the industry regulator and it will take at least 18 months to complete the industry restructuring.
On the other hand, the fixed-line carriers are facing a continued fall in users, and they should get a mobile network immediately, Xi Guohua, vice minister at the MII, was quoted by media reports.
Talking about 3G, the home-grown TD-SCDMA obviously needs more time to be commercially mature. But widescale construction of the TD-SCDMA networks hasn't even started.
Industry officials said that before restructuring can start and the advent of 3G, unreasonable policies, such as roaming fees, should be eliminated.
The roaming fees, imposed on users who make intracity-mobile calls, are expected to be dropped next year. The policy on free incoming calls will be kept as it popular, according to the regulator.
The roaming fee (0.60 yuan a minute), along with long-distance call costs, amounts to 1.3 yuan (US cents) a minute, almost 10 times the cost of local communications.
The country should allow private and foreign capital to be invested in the telecom market to make it more competitive and market-oriented. It should allow virtual carriers, which rent existing networks, to provide services.
Another innovation would be to allow for number portability whereby users can keep their existing cell phone numbers when they change carriers, Gartner's Shen said.
As the voice business declines, mobile phone carriers expanded their portfolio to new categories.
'The rural area market is still a gold mine for carriers when the mobile penetration rate in major cities reaches saturation point,' said Oriental Securities' Wang.
Meanwhile, cell phone carriers have touted value-added services such as instant messages (China Mobile's Fetion and BlackBerry) and mobile stock services (China Unicom's stock phone).
Fixed-line operators like China Netcom is the sole broadband provider of the Olympics next year while China Telecom will test the IPTV (Internet Protocol TV) business in several cities including Shanghai.
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