Tag Archives: MIIT

Business, Finance, Occupation & Industry

Innovation or Stagnation in the Chinese Mobile Market?

Leave a comment

By Dan Newman, The Motley Fool

Filed under:

Chinese cellular service providers are not happy with competition, and they’ve enlisted the help of a government ministry to help find a solution. However, this kind of state intervention against new technologies could set a tone for the future of Chinese innovation, and could base investing in China much more on government policy than a company’s merits.

The disruption
With the rise in popularity of Tencent‘s WeChat application, which subverts the mobile companies’ usual text and multimedia message plans, China Mobile , China Unicom , and China Telecom have been talking with the Ministry of Industry and Information Technology to look into ways to charge for the free application. Because of WeChat and similar services, the telecom companies not only get stung by a drop in traditional messaging, but typically provide location services used by the app for no charge. Because of the potential hit to revenue, China Unicom CEO Chang Xiaobing hopes that services like WeChat will be “free today, for-pay tomorrow.”

For an example of the slowing text use, take China Mobile. Even though its users still sent 8 billion more text messages in 2012 compared to 2011, that growth amounted to a little over 1%. However, the newer messaging services like WeChat require data usage, and China Mobile‘s wireless data traffic increased over 280% from 2011 to 2012. While WeChat’s 300 million users use fewer conventional texts, they continue to gobble up data.

Globally, the volume of texts is expected to increase nearly 60% by 2016, but during the same time, instant messaging will more than quadruple and double its share of the messaging market to about 35%.

Users of WeChat have expressed their rage over any plans to charge for the service, but if the MIIT obliges the phone companies and implements new fees, it’s likely another free service will take WeChat’s place. Investors in Tencent also lost some faith when the MIIT hinted at such a charging scheme for the application, sending the stock down over 1.5%. In the meantime, the dispute raises many questions for business in China. Will the government hamper new business at the expense of innovation to enrich established corporations? How much control can the government wield over new services, and is it possible to regulate every new threat? How can investors protect themselves from such unforeseen regulatory action?

On the other hand
The MIIT is also opening up competition in China‘s mobile industry, allowing mobile virtual network operators to begin leasing network access from current network operators and reselling it to consumers. This could allow Tencent to run its own wireless service, although it would still have to come to an agreement with current network providers. The mobile Chinese market remains a dynamic and quickly changing story.

It’s incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out “Who Will Win the War Between the 5 Biggest …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

More Wireless Competition in China?

Leave a comment

By Dan Radovsky, The Motley Fool

Filed under:

China‘s three mobile operators, China Mobile , China Telecom , and China Unicom , may not only have to start gearing up for more competition, but also provide the network capacity for their new rivals.

Last January, the Chinese Ministry of Industry and Information, or MIIT, sought public comments on its plans to encourage more mobile competition by allowing mobile virtual network operators, or MVNOs, access to the country’s already installed wireless network infrastructure.

The window for that input closed on Feb. 6, and “as soon as in May,” according to media reports repeated by ShanghaiDaily.com, the MIIT will allow MVNO applicants to begin operating.

An MVNO buys network access from an established mobile operator and resells wireless services under its own brand. In the U.S., MVNOs include brands such as Virgin Mobile, which leases service from Sprint Nextel , and TracFone, which gets wireless access from AT&T and Verizon , as well as Sprint.

The government‘s proposal states any private Chinese company with telecom experience and employing over 50 people can apply for the two-year MVNO trial, according to ShanghaiDaily.com. The MIIT plan is for the wireless operators to provide the MVNOs use of their networks at “fair or favorable” prices, according to the draft proposal. The software company Ufida told ShanghaiDaily.com it had applied to become an MVNO.

Rumors of China allowing MVNOs to operate have been swirling around for at least 10 years, according to informa writer Tony Brown. He described an encounter back in October 2003 when a loose-tongued telecom industry executive told him about a done-deal in the strictest of secrecy: “Virgin Mobile is going to launch as an MVNO in Shanghai,” he told Brown.

That sure thing never happened, of course, but the MIIT call for input in January reminded Brown of that encounter and had him speculating on what companies would be likely MVNO candidates — and what that would mean for the actual operators that would have to service them.

If the mobile operators bring in lightweight companies just to meet the two-MVNO per operator mandate from the MIIT, the threat of serious competition is lessened. Those minor MVNOs could include electronics retailers who already sell handsets for the operators. That type of MVNO partner wouldn’t be a threat, but would not offer any — please excuse this overused word — synergy to the relationship.

On the other hand, partnering with a popular over-the-top, or OTT, company that provides broadband content delivery, such as audio and video, outside the control of an Internet service provider, could bring more subscribers to the network — but at some risk, depending on which direction the revenue from that increased traffic would flow.

Popular Chinese messaging service operator Tencent, and Chinese search engine Baidu , according to Brown, would be able to use being an MVNO to their own advantage, as well as providing upside to the mobile network they would use.

The OTTs would gain from not having to …read more
Source: FULL ARTICLE at DailyFinance