China Mobile Takes the Bus 中移动将在北京公交车内提供wi-fi网络

By newsdoug on April 23, 2012

Rather than delve into the latest lackluster results from China Mobile (HKEx: 941; NYSE: CHL), I’ll focus my latest look at China’s perennial laggard telco today on an interesting new initiative that is seeing the company launch wi-fi service on buses. But before I begin with the bus talk, I should at least mention quickly that China Mobile released its latest quarter results last Friday, which showed its profit continued to rise at an anemic rate, 3.5 percent to be exact, missing analyst expectations in the swansong earnings report under recently retired Chairman Wang Jianzhou. (company announcement; English article) Now that I’ve mentioned the boring results, which should come as a surprise to no one, let’s move on to the bus initiative that has seen China Mobile’s Beijing subsidiary team with the local bus operator to develop wi-fi access for commuters, starting with service on the capital’s perpetually congested second ring road. (English article) This latest initiative is part of the company’s broader wi-fi plans announced last year to setting up 1 million hot spots by 2014, as it tries to create an interesting high-speed Internet offering to compensate for its inferior 3G product based on a problematic homegrown Chinese technology. (previous post) I said last year the ambitious wi-fi build-out was misguided, as hot spots are highly localized and thus far less reliable than a 3G product that can be accessed nearly anywhere in a major city. But that said, I really do like this latest bus initiative for several reasons, including the fact that it’s quite creative and unlike anything I’ve seen before. But creativeness aside, the main attraction of this product is that it could be highly appealing to the thousands and thousands of Beijing commuters who spend 2 hours or more on buses each day in their trips to and from work on the nation’s capital’s perpetually jammed streets. A hot spot in a coffee shop or convenience store isn’t all that interesting, as many such stores already offer their own wi-fi service for free. But no such services are available on most buses and subways, even though these forms of public transport are the place where many people spend their third biggest amount of time each day, behind only their homes and offices. What’s more, time spent on buses and subways is generally considered wasted or idle, making it perfect for people who want to read the latest news or play games with their friends over the Internet. The keys to this initiative’s success will be two-fold. Technology will be the most critical, as consumers won’t embrace this product if they continually lose their signals or have to battle slow Internet speeds. Second will be pricing. To succeed, this product will have to be priced significantly lower than existing 3G services — perhaps as little as half the price — since traditional 3G is more reliable and can also be used for voice calls. Still, despite these technological and pricing challenges, I have to commend China Mobile this time for an interesting initiative that shows it is trying to regain some of the ground it is fast losing to rivals China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU).

Bottom line: China Mobile’s new wi-fi bus initaitive looks like an interesting move with a 50-50 chance of success, targeting commuters with lots of idle time for web surfing.

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