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Entries in 2600Hz (1)

Friday
Sep202013

Telecom innovation: China is not even in the race 

This is what telecom innovation looks like.

A US startup, 2600hz Mobile, is ready to launch an MVNO with open access and APIs that will allow others to build apps to run on top of it. As the company blog says:

 ...we’re the first company to basically try to open-source cellular integration. We’re trying to encourage the hackers, the tinkerers, the enthusiasts out there in VoIP to get engaged in the next generation of networks - cellular. We’re trying to give you a way where you don’t have to spend $250,000 to just be able to play around with a test cell phone on your own little mobile network.

With this platform its customers can, for example, combine VoIP and cellular to offer a mobile/WiFi hybrid; create low-cost wireless and fixed VoIP bundles; or offer smart services that help users avoid roaming fees.

Today that's innovation. In five years it will be routine.

Here in China, all of that is impossible and will remain impossible. The idea of opening a  network to people without government sanction is a complete non-starter.

As it happens, China is right now trying to introduce an MVNO sector.

A genuinely competitive market would embrace the idea of a network as a giant apps platform. But that's not China. Instead, the new MVNO entrants will have the freedom to offer exactly the same services as the existing infrastructure owners.

For sure, those MVNOs will provide a touch of badly-needed extra competition. But even the most optimistic forecast doesn't expect them to grab more than 1% market share over the next three years.

That's assuming they're allowed to compete. From the limited information available, it looks like they will have to cope with a wholesale price as high as the lowest retail price.

The China Securities Journal reports that the licence shortlist will likely be finalised in October. Which means perhaps the first trials by year-end. We won't hold our breath.

As if to emphasise the air of unreality around China telecoms, a China Mobile honcho last week claimed that WeChat was more of a monopoly than the giant cellco. 

Li Zhengmao, a China Mobile vice-president, said that his company wasn’t a monopoly because it had a mere two-thirds of the market. Speaking at a conference, he said WeChat had much a bigger share of the audience in the room than China Mobile.

Peking University economist Zhang Weiying explained to Li that a monopoly is something which the government “allows some people to do, but doesn’t allow others to do."

At least there's no confusion about open access networks. They're off-limits to everyone.