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Entries in WeChat (3)


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.


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.


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.