Tag Archives: China Unicom

China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest mobile carrier, is forging ahead with a couple of new initiatives in the broadband and 4G spaces, even as it neglects its 3G mobile business that continues to lose market share. I’m happy to see that the company seems determined to move ahead with broadband, which could become an important new revenue source. But I worry that the telecoms regulator will soon clamp down on China Mobile’s aggressive 4G drive that is increasingly looking like an unlicensed commercial service.

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I’ve always suspected that China Mobile (HKEx: 941; NYSE: CHL), the country’s dominant mobile carrier, vastly exaggerates the size of its 3G business, and now it seems like the more authoritative national telecoms regulator agrees with me. The news shouldn’t come as a shock to anyone, but it does provide a clearer picture of how the 3G market is developing in China, an important indicator since high-speed data services that can be delivered over 3G and upcoming 4G networks is clearly the wave of the future. Let’s look at the latest news, which has an official from the Ministry of Industry and Information Technology saying the number of true 3G subscribers in China is probably around 80 million, or about half the combined total reported by China Mobile, along with its 2 main rivals, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). (English article) The official puts the blame for the inflated total figure squarely on China Mobile, saying the nation’s top mobile carrier exaggerates its numbers by including many voice-only users among the subscribers for its 3G network. By comparison, Unicom’s and China Telecom’s 3G subscribers use their service for data-related products such as Internet surfing. China Mobile’s latest figures show the company had 62 million 3G subscribers. So if most of the inflation is coming from China Mobile, it’s probably fair to assume that as many as 50 million or more of the company’s 3G users are simply using the service for voice calling, reducing China Mobile’s total figure to a mere 10 million or so. Even that figure could be high, as I have yet to meet a single person who uses China Mobile’s 3G service for Web surfing, with nearly everyone preferring Unicom and China Telecom. Industry followers know the reason for China Mobile’s anemic 3G performance is largely due to the fact that the government forced it to build a network based on a homegrown technology called TD-SCDMA, which has been plagued with reliability problems and lack of handsets. China Mobile has shown signs of planning to boost its 3G efforts following the recent retirement of long-serving Chairman Wang Jianzhou, announcing a steady stream of new handsets and chips for TD-SCDMA phones. But it’s still unclear how serious the company will be on that front, with its new leaders sending out some troubling signals back in April that China Mobile will continue to focus its efforts on next-generation 4G services, which aren’t expected to receive an official license from the MIIT for at least another couple of years. (previous post) Perhaps this latest indirect criticism by the telecoms regulator will embarrass China Mobile into promoting its 3G service more aggressively, which it really needs to do to remain competitive with Unicom and China Telecom. Otherwise, it could not only become a bit player in the 3G space, but could also see its overall market position quickly slip as more and more mobile users migrate to data service plans.

Bottom line: The industry regulator’s disclosure that China Mobile vastly overstates its 3G subscribers reflects the company’s weak promotion of the service and bodes poorly for its future position.

Related postings 相关文章:

◙ China Telecoms Regulator Plays 3G Target Games 工信部制定3G目标

◙ New China Mobile Chief Sends Bad Signals 中国移动新任领导传递糟糕迹象

◙ China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代

A steady stream of news has been coming from a broadband conference taking place in Beijing this week, including reports that the fixed-line broadband market could soon get a healthy dose of new competition with the entry of wireless giant China Mobile (HKEx: 941; NYSE: CHL) into the mix. (Chinese article) I’ll admit that I was never really clear why China Mobile had never previously entered the lucrative market for fixed-line broadband services, which is now dominated by its 2 main rivals China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE CHU), who offer services over their legacy networks inherited from the break up of China’s former fixed-line phone monopoly. After reading the reports, I’ve learned that China Mobile was never formally licensed to directly offer fixed-line broadband and instead was only allowed to offer such service through its China Railcom unit, the former telecoms unit of China’s national rail operator that China Mobile took over as part of an industry restructuring 3 years ago. Apparently that restriction was preventing China Mobile from getting many customers for its fixed-line broadband service, according to the reports. It looks like that could soon change and China Mobile could finally get the license it’s seeking to offer fixed-line broadband services directly. The biggest new factor in the equation is the ongoing anti-monopoly investigation launched last year by the powerful National Development and Reform Commission (NDRC) into China Telecom and Unicom over their fixed-line broadband service. (previous post) China Telecom and Unicom have taken steps to improve their broadband services since then, but the NDRC would certainly be pleased to see another major new player like China Mobile come into the space. What’s more, China is in the process of consolidating its many regional cable TV networks into a single operator, which could offer an instant wired-line platform for China Mobile to offer its service over. We saw signs last year that China Mobile was looking for just such a tie-up with the new cable TV operator, and broadband Internet service could be one of the easiest and most logical products for it to launch in such a tie-up. (previous post) Lastly, China Mobile has new top leadership following the recent retirement of its long-serving chairman, and those leaders are showing early signs of taking more aggressive steps to jump-start the company’s flagging growth with just this kind of initiative. If things keep moving in this direction, which looks likely, I predict we could see China Mobile announce a tie-up with the new national cable TV operator as soon as year-end, and for it to also announce a new fixed-line broadband license around the same time.

Bottom line: China Mobile could tie-up with the country’s new national cable TV operator as soon as year-end, and launch a new fixed-line broadband service soon after that.

Related postings 相关文章:

◙ China Mobile Eyes New Nat’l Cable Network 中国移动有望携手中国广播电视网络公司

◙ China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代

◙ Anti-Monopoly Regulator Makes Poor Choice in Chasing China Telecom 中国反垄断初试牛刀 选错对象

China’s telecoms regulator has just announced an ambitious new 3G target for the country’s three major wireless carriers, continuing a dangerous tradition of pressuring big State-run firms by challenging them with difficult and often unattainable targets set by Beijing. While planning and setting targets are part of any good business practice, such activities should be left to the companies themselves rather than central government officials. The Ministry of Industry and Information Technology (MIIT) announced last week it wanted the nation’s three major mobile companies to sign up more than 450 million 3G subscribers over the next three years, with users of these state-of-the-art networks to account for 36 percent of the nation’s total mobile subscribers by that time. (Chinese article) These targets continue a tradition begun in 1949 when the nation’s economy was centrally planned and officials in Beijing set specific numeric targets for a range of industries under macroeconomic plans created every five years. But such plans have become anathema to today’s more market-oriented economy, and this latest one for 3G will place great pressure on the nation’s three mobile carriers, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). Setting overly-ambitious targets could actually prove counterproductive if it prompts the three carriers to resort to cutthroat competition and the signing up of fake subscribers. Since starting to build their newest networks in 2009, the three carriers have signed up about 150 million 3G service subscribers, accounting for about 14 percent of the nation’s total mobile subscribers. That means the number of 3G subscribers must triple between now and 2015 to meet the new target, a growth rate that is certainly attainable, but quite ambitious. In the past, Beijing has set similarly challenging goals for many of China’s biggest industries, often with undesirable results. In one of the most glaring cases, the nation’s banking sector was pressured to boost lending after Beijing announced a 4 trillion yuan economic stimulus plan to spur domestic consumption at the height of the global financial crisis. As a result, most of the nation’s banks are now dangerously undercapitalized and facing a potential glut in bad loans, many made to local governments for unneeded infrastructure projects. There are already signs that China’s three wireless carriers may be getting reckless in their zeal to ink more 3G subscribers. Many believe that China Mobile is inflating its 3G figures, possibly by selling large numbers of subscriptions to corporations that don’t really use the service. Meanwhile, China Telecom’s earnings suffered in its latest reporting quarter due to its aggressive 3G marketing strategy. Rather than set numbers for the three operators, the regulator should offer broader guidance and policy support to the companies and let them set their own targets. Otherwise, it could discover the carriers have met their ambitious targets only with the help of inflated figures and at the cost of rampant competition.

Bottom line: The telecoms regulator’s new ambitious 3G targets could force China’s 3 telcos into cutthroat competition and user inflation to meet those goals.

Related postings 相关文章:

◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城

◙ China Telcos In New Drives at Home, Abroad 中国三大电信运营商海内外发力

◙ New China Mobile Chief Sends Bad Signals 中国移动新任领导传递糟糕迹象

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.

Related postings 相关文章:

◙ China Telecom Joins Hot Spot Frenzy Wifi热潮兴起 中国电信与中国移动谁将胜出？

◙ China Mobile Wi-Fi Play Misguided 中移动：百万WiFi热点？

◙ China Mobile Tries 4G Back Door in Shenzhen 中国移动试图绕过监管机构于深圳秘密规划4G网络

China Mobile (HKEx: 941; NYSE: CHL) marked a major milestone last month when Wang Jianzhou stepped down as its long-serving chairman, leaving a mixed legacy at the world’s largest mobile carrier that included the start of what could easily become a long-term decline. Now it is up to the company’s new leaders to try to halt that downward trend, or risk seeing a company that pioneered mobile service in China slowly slide into the realm of second-tier player. One of the first major signals from the company’s new leaders since Wang’s departure a month ago wasn’t very encouraging. That sign came at a recent press conference, where new Chairman Xi Guohua said China Mobile would launch a commercial fourth-generation network in the tech-savvy former British colony by year-end that could support its own homegrown 4G technology standard, called TD-LTE. That announcement — Xi’s first as chairman — continued Wang’s legacy of strongly promoting 4G as the answer to his company’s sputtering fortunes, even though China’s telecoms regulator has indicated it won’t issue commercial 4G licenses for at least a couple of years – the equivalent of an eternity for a fast-moving business like mobile service. Instead of fixating on 4G, Xi and his new leadership team need to turn their focus to China Mobile’s neglected 3G network, based on another homegrown standard called TD-SCDMA. Despite spending billions of dollars to build a TD-SCDMA network, which is already technologically inferior to products from its rivals, China Mobile has done little to promote or develop its 3G service and is rapidly losing position in the space as a result. In his 8 years at China Mobile, Wang built the company into one of the world’s most profitable and cash-rich mobile carriers, increasing its share to a dominant 72 percent of the market by late 2008 from 65 percent when he arrived. But then he hit a roadblock in early 2009 when China formally awarded licenses for 3G. Unlike rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), whose licenses allowed them to build networks based on globally developed technologies, China Mobile was ordered to build its network using the homegrown and problem-plagued TD-SCDMA standard. Rather than use China Mobile’s huge cash pile and dominant market position to aggressively develop 3G, the company under Wang spent billions of dollars to build a patchy 3G network and did little to attract new subscribers. It then proceeded to tell the market it was placing its bets on next-generation 4G technology that looked like it wouldn’t be ready for commercial service for at least 2 to 3 years. As the company did this, its share of the 3G market rapidly deteriorated, from around 45 percent a year ago to a current 39 percent. The recent Hong Kong initiative seems to signal 4G will remain the company’s main focus under Xi’s new leadership, continuing Wang’s policy. The only problem is, if the current trends continue, China Mobile could easily see its share of the 3G market – whose users will be the first to make the switch to 4G – rapidly erode to the point where it falls to second or even third place by the time 4G licenses are awarded. By then, China Mobile could well discover that many of its former subscribers who defected to its rivals’ better 3G networks are happy where they are, meaning it will be too late to win them back to the 4G network that is now receiving so much of its energy and resources.

Bottom line: China Mobile’s new leaders need to end the company’s fixation on 4G and focus on the present or risk seeing their company become a second-tier player.

Related postings 相关文章:

◙ China Mobile: Improvement Ahead Under New Leaders 新领导有望助中国移动复苏

◙ China Mobile 3G: Where Are the Subscribers? 中国移动3G：订户在哪里？

◙ China Mobile Tries 4G Back Door in Shenzhen 中国移动试图绕过监管机构于深圳秘密规划4G网络

I don’t like to admit this, but I’m rapidly losing both confidence and interest in China Unicom (HKEx: 762; NYSE: CHU), China’s second biggest telco, which seems to be struggling with a never-ending series of management shuffles that are diverting its attention from its real business. To make matters worse, the company is facing a major challenge from China Telecom (HKEx: 728; NYSE: CHA), the smallest of China’s 3 major carriers, which has just announced some new figures suggesting it will get even more aggressive in its highly effective campaign to steal market share from both Unicom and industry leader China Mobile (HKEx: 941; NYSE: CHL). Let’s look at Unicom first, which has made steady headlines over the last year for all the wrong reasons, mostly involving misjudgement of China’s 3G market and an endless series of management reshuffles. The latest reports center on the latter type of news, with some reports saying the company is now undergoing a shift that will combine its sales and marketing departments, while others simply say adjustments are continuing. (English article; Chinese article) I hope readers will excuse me if I sound too cynical, but Unicom is showing all the signs of a company living in China’s socialist past, when state-controlled work units and their employees had little or no interest in running an efficient business and instead were more interested in the names of their positions and departments, and loved to hold endless meetings that produced no particular results. If this is the kind of company that Unicom wants to become, then perhaps there are some bureaucrats in Beijing who will welcome this return to a friendlier socialist past. But if it wants to be a competitive company, this fixation on bureaucracy needs to end soon. Otherwise the company risks becoming irrelevant and losing its spot as China’s second largest telco to China Telecom. On that front, China Telecom has just announced it is aiming to sell 80 million 3G handsets this year, some costing as little as 300 yuan, or less than $50 each. (Chinese article) I was surprised earlier this year when a company executive implied China Telecom was aiming to add 50 million 3G subscribers this year, which equated to 35 percent growth rate to its total subscriber base from the beginning of this year. (previous post) This new 80 million handset figure implies even more aggressive growth targets, and if the company really added that many new 3G users this year it would translate to more than a 60 percent growth rate over its total user base from the beginning of the year. If the current trends continue, which looks likely, I would fully expect to see China Telecom pass Unicom by the end of this year in 3G subscribers, and could even see it passing Unicom in terms of total subscribers sometime next year.

Bottom line: An increasingly focused and aggressive China Telecom is likely to pass an increasingly mismanaged Unicom by the end of this year in terms of 3G subscribers.

Related postings 相关文章:

◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城

◙ Unicom Spends, But Can It Earn? 联通拟增加开支加强3G业务 效果有待观察

◙ China Mobile: Improvement Ahead Under New Leaders 新领导有望助中国移动复苏