Navigation
21Vianet 2600Hz 3Com 3Leaf 4G 4G licensing 5G Africa Alcatel Shanghai Bell Alcatel-Lucent Alibaba Android antiitrust Apple APT Satellite Arete AT&T auction backbone Baidu Bain bandwidth base station Battery broadband cable CBN CCP censorship Cfius China China brands China FTTH China hi-tech China market China media China Mobile China Mobile Hong Kong China Science China Telecom China Unicom chips Ciena Cisco civil society CNNIC Communist Party convergence copyright CSL cybersecurity Datang drones Egypt Elop Ericsson EU Facebook FDD LTE FDD-LTE feature phones Fiberhome FLAG forecasts Foxconn FTZ Galaxy S3 Google GSMA GTI handset handsets Hisilicon HKBN HKIX HKT HKTV Hong Kong HTC Huawei Hugh Bradlow Hutchison India Infinera Innovation Intel internet investment iOS iPad iPad 2 iPhone IPv6 ITU Japan KDDI KT labour shortage Leadcore low-cost smartphone LTE MAC MAE Mandiant market access Mediatek Meego Miao Wei Microsoft MIIT mobile broadband mobile cloud mobile data mobile security mobile spam mobile TV mobile web Motorola music MVNO MWC national security NDRC New Postcom Nokia Nokia Siemens Nortel NSA NTT DoCoMo OTT Pacnet Panasonic patents PCCW piracy PLA politics Potevio price war private investment Project Loon Qualcomm quantum Reach regulation Reliance Communications Ren Zhengfei Renesys RIM roaming Samsung sanctions Scania Schindler security shanzhai Sharp SKT Skype smartphones Snowden software Sony Ericsson spectrum Spreadtrum startups subsea cables subsidies supply chain Symbian tablets Tata Communications TCL TD LTE TD-LTE TD-SCDMA Telstra Twitter urban environment USA US-China vendor financing Vitargent Vodafone New Zealand WAC WCIT Web 2.0 web freedom WeChat WhatsApp Wi-Fi Wikileaks Wimax Windows Mobile WIPO WTO Xi Guohua Xiaolingtong Xinjiang Xoom Youku YTL ZTE

Entries in OTT (6)

Tuesday
Jul302013

Chinese operators get into bed with WeChat

Chinese operators – well, two of them anyway – have bowed to the inevitable and are striking deals with popular messaging service WeChat.

The pathbreaker is China Unicom, which is to announce a partnership in Guangzhou this afternoon.

China Telecom is also said to be prepping a service which would give users 2GB of WeChat and Sina weibo data for just 6 yuan (0.98) a month.

Both partnerships will take place in Guangdong, the wealthy southern province, and have a flavour of ‘suck it and see’ as operators test out the cooperative approach to dealing with OTT.

Missing from the party is China Mobile, which early this year skirmished with Tencent, the company behind WeChat, complaining the service was using up valuable network resources.

Rumours swirled that WeChat would be forced to charge its 300m users but, as this blog pointed out at the time, it was only China Mobile that had a problem, thanks to its under-powered 3G network. Plus it was unlikely that a newly-installed government would make itself so gratuitously unpopular.

The washup of that imbroglio is that the two smaller operators have gone over to the ‘enemy’ while China Mobile is on its own.  

According to Sohu IT, China Unicom is offering WeChat Wo for WeChat data at 15 yuan a month for those already with a minimum 36-yuan monthly package. (Wo is Unicom’s mobile data service.)

WeChat Wo will come with HD photos and HD movies, some free games, and the ability to support Unicom’s Wo payment feature. If all goes well in Guangdong, Unicom is hoping for quick expansion into other southern provinces such as Jiangsu, Zhejiang and Fujian.

For the operator, this is an important ‘ice-breaker’ in forging cooperation with OTT players, a Unicom source told Sohu IT. For Tencent, it is a chance to grow the business with a strong partner with a deep channel. Tencent chief Pony Ma reportedly played a direct role in the negotiations.

Such OTT partnerships are new to mainland China, but they’ve been in the Hong Kong market since last year. Hutchison launched a WhatsApp bundle last September, while PCCW has been selling a WeChat package since February.

Meanwhile, China Mobile is trying to go it alone with messaging app Fetion and Skype-like voice application Jego. Embarrassingly it had to pull Jego from the domestic market just after launch because mobile VoIP is still illegal in China.

Yet this won't trouble China Mobile. It's still working the old playbook, focusing on networks, not apps. At year-end, while Telecom and Unicom are planning their LTE networks, it will be racking up 4G subs.

Monday
Apr082013

Solving the WeChat problem 

Once again, Tencent boss Pony Ma says he won’t be charging for WeChat, according to this Reuters report.  That’s been his stance ever since the story broke in February.

Ma might be in denial, he might be reassuring customers, or perhaps positioning himself ahead of the inevitable user backlash.

But his repeated claim that customers won’t be paying for apps may also points up to a solution - namely that Tencent, and not users, pays the fee to operators.

This is premised on the idea that the charge is necessary because of the extra network costs borne by the cellcos, and in particular China Mobile. When MIIT boss Miao Wei last week confirmed the charge was being planned, he explicitly couched it in those terms.

He certainly didn’t say it was because WeChat app was eroding traditional revenue source.

One reason he wouldn’t say that is because China Telecom and China Unicom have no issue with WeChat – it’s driving data traffic and China Mobile’s customers to them.

Another reason is that, like Ma, he could be trying to avoid the outcry when 300 million consumers discover they’ve lost a favourite service.

In this context it’s worth remembering that he has left it to the operators to work out the details of the charging scheme. A nice bit of footwork.

Of course, it may be that the MIIT is totally on-board with this and sees it as a means not just to shore up the operators’ businesses, but also of reining in other unruly apps.

If that is so it would certainly open up a fresh internet battlefront, but on what we know it seems unlkely.

The path of least resistance is for Tencent to pay a fee to help cover the network costs. This will hurt Tencent a little, but a paid-app arrangement will damage everyone.

Monday
Apr012013

WeChat fee 'likely', says MIIT chief 

China’s telecom regulator has confirmed it is planning to impose a fee on the free OTT app WeChat.

Miao Wei, the head of China’s Ministry of Industry and Information Technology, told the financial publication Caixin Sunday that the demands by operators for the fee were “very reasonable” and it was “likely” to go ahead.

“The operators say ‘I maintain such a huge network, [but] I still need to invest and to operate. Apart from traffic [fees] there still should be these kinds of charges – that is sensible and reasonable,” Miao said.

Miao’s remarks follow weeks of speculation over the fee, which was reportedly discussed at a meeting between WeChat operator Tencent, the MIIT and operators in February.

But paid WeChat is a long from being a done deal. Miao and the three unloved state-owned operators will need to overcome opposition from WeChat’s 300 million users, not to mention 1.1 billion mobile consumers long disenchanted over pricing and services.

“The WeChat fee will become the most serious battle so far over China’s internet,” Chinese web entrepreneur Fang Xingdong today declared on Sina Weibo.

To win the argument Miao will have to do better than to merely claim that WeChat was “certainly not free” because users are already charged for bandwidth.  Consumers will be asking why they need to pay again if the bandwidth was already paid for.  

Monday
Mar252013

Latest: China Mobile's war on WeChat

China's OTT battlefront is essentially a contest between Tencent, the savvy internet firm, and China Mobile, the mobile titan. In the past week it's become a daily news staple.

The latest is Tencent chief Pony Ma at a public forum on the weekend, denying he has any plan to charge fees for WeChat, Tencent's wildly successful messaging app. 

Just as predictably, he also made a pitch for continued cooperation with the operators, pointing out WeChat was already generating a good deal of traffic. In an interview last week he talked up future joint efforts around machine-to-machine. 

Yet the sheer weight of WeChat fee stories – even the denials – has helped create a climate where people believe paid WeChat is a possibility. The state China Radio news service reported Ma's denial but also went ahead with a voxpop asking people if they would use WeChat if they had to pay for it.

In his denial, Ma avoided addressing the reports that the MIIT had called in the operators and Tencetn to canvass the possibility of paid WeChat.

In that light, the form of words from Tencent’s spokesperson is interesting: “We have not received any advice of any meeting,” he reportedly said. Like his boss he said there was “no plan to charge fees.”

So what’s China Mobile’s game plan? The head of China Mobile Research Institute, Bill Huang, memorably floated the idea of the freecall 800 charging model - ie, called party pays – being applied to mobile data. Sensibly he went on to say merely that this “might emerge in the future.”

Huang complained that because of its always-on function, WeChat occupied 60% of China Mobile’s signalling layer despite accounting for just 10% of data traffic.  But even he said it would be unrealistic for operators to try to squeeze the OTT players because “they represent customer needs.” 

In the same vein, China Mobile CEO Li Yue said technology change was inevitable in the industry, and observed that SMS pretty much wiped out much of the greeting card industry.

Meanwhile, in an amazing coincidence, a China Mobile slide pack was leaked online last week, revealing the firm is considering a revamp of its Fetion messaging service for the WeChat era. Launched three years ago, it has some 99 million active users, up 15% in the last year. 

Given the lamentable record of operators versus apps, Mobile's ambitions are brave. This blog applauds them, however. As long as China Mobile is willing to throw a few punches, those headlines will keep rolling.

Friday
Mar152013

China Mobile vs. the internet 

China Mobile’s amped-up network investment plan doesn’t surprise in light of its modest result and its recently-expressed views on the rising internet menace.

It yesterday posted a 2.7% rise in earnings to 129.3 billion yuan ($20.8bn) – slightly ahead of estimates, according to a Reuters analysts’ poll, but still the slowest growth since 1999. Net income rose 5.2% in 2011.

Its now promising to spend nearly $31 billion on its GSM, 3G, LTE and Wi-Fi networks this year, including $6.7 billion on 4G. Chairman Xi Guohua says the company’s “mantra” is that “network quality is the lifeline for telecommunications companies.”

But tipping a bucket of cash over the vendor community isn't going to do much about the existential threat from OTT players that supposedly keeps Xi awake at night.

He recently described internet players like WeChat and Skype as a bigger threat than China Unicom and China Telecom - a neat putdown of his smaller rivals as well as a hint that the three are ready to band together to fight off the threat.

The Chinese web is aflame this week with speculation of a “showdown” between the telcos and the OTT guys,  including talk of forcing fees upon Tencent, the company behind WeChat. Tencent has denied this.

For all this, the evidence of serious bleeding for operators is thin.

Total SMS volume grew a little over 2% last year, but the number of texts per user fell 9.45%, as this chart from Marbridge shows. Yet the number declined 7.54% in 2011 and 6.81% in 2010.

Given that WeChat didn’t start until January 2011, it’s hard to see the trend as anything more than the natural decline in user spend.

In neighbouring Hong Kong, PCCW Mobile feels so threatened it’s actually done a deal with WeChat, offering customers all you can eat starting at HK$8 (US$1.03).  Hutchison has been offering a similar deal with WhatsApp since September.

In truth, the crimp in China Mobile’s earnings has come from its TD-SCDMA network handicap and lack of an iPhone. Both those (related) disadvantages will disappear in the 4G era.

In the meantime the company has delivered another reminder that customer-friendly innovation isn’t in its toolkit.