InsideGFW

Recent news reported that China Unicom is going to release a new RMB36 3G Plan in May that will be cheaper than its previous plans and China Mobile’s RMB39 monthly plan. It is also planning to cut its iPhone plan from a general RMB6,999 to RMB5,880 which shows it’s eager to catch up with the other two competitors China Mobile and China Telecom. Despite the big turn off in sales that the Chinese version of iPhone doesn’t have a WiFi mode, China Unicom is trying to use this new 3G Plan markdown to appeal to a greater number of users using different parallel imported cellphones including iPhones that support WCDMA and WiFi to subscribeto its 3G standard.

Compared to China Union’s future RMB36 3G Plan with 150 MB data usage, China Mobile’s RMB38 Plan has been released for almost five months and contains a 500 MB data usage package and a very cheap long-distance call rate (as low as RMB0.1-0.2 per minute). Although it has the biggest 2G and 3G user base in China and cheaper call rates, China Mobile still faces the problem of a limited selection of terminal handsets. Due to China Mobile’s network TD-CDMA, the special standard in China and lack of confidantes in the TD-CDMA market, many international mobile manufacturers have difficulties providing a suitable terminal device. If China Mobile wants to keep its leading position in this fierce 3G battle, it must find a way to provide multiple options to consumers by lobbing factories to support its standard.

According to the data published from the Ministry of Industry and Information Technology (MIIT), in the end of April, China Telecom had the second biggest subscriber base of 30.8% in this intense 3G competition, only slightly lagging behind first-placed China Mobile (42.5%) and ahead of China Unicom (26.7%). In an effort to attract non-subscribers, China Telecom recently started providing many special offers to its massive former line-in & ADSL broadband users to switch to its EV-DO 3G standard by including a free upgrade from 512K to 2M broadband, a cheap 3G family package together with line-in, ADSL broadband and a 3G cellphone…etc

This data proves that China Telecom is getting the biggest 3G subscriber increase rate and its user base has increased in the last six months. If China Telecom continues to step forward, there is a big chance that it may replace China Mobile to be the next winner of China’s Telecommunications market.

From the previous article you have gotten a brief idea about the three China mobile telecommunication tycoons. This article will show why almost 90% of China’s 3G network users are running this new 3G technology on a 2G device or a PC.

It seems like the three tycoons have a bright vision for China’s mobile market, which also fits in with the research done by Google saying that 60% of the world’s new mobile phone users will be coming from Asia and in particularly China, as the biggest country in Asia with the largest population. And, they hold the view that the one, who gets the biggest market share today, will be the only one who still will be here tomorrow.

So regardless of the expenditure, they try to attract customers to use their 3G services by providing free phone packages to customers, eliminating roaming fees, cutting down on the cost of long distance calls, offering better deals to existing 2G subscribers, etc

Using these kinds of measures and huge investments on advertising and marketing, they got a lot of subscribers to switch to or take up their 3G services. However, a large percentage of the people are those who just get the cheap mobile phones with very basic functions and a 3G plan subscription as it is usually more competitive than existing 2G plans. There are people who changed from having an ADSL connection to using a 3G dongle. Also there are people like me just want to avoid paying the roaming fee by using the 3G network.  I am also going to change my 2G plan to a 3G one next month because the price will be cheaper, but I will be running this on my BlackBerry 8520 which is not a 3G phone. None of these people actually have a 3G device or use the 3G network. They just simply changed to 3G and use it as a 2G network without knowing what they can do with it.

The above gives you a better idea about the 3G market in China. But for what do the Chinese people use their mobile phone? How many people are using smart phones? Stay tuned for next week’s part 3.

According to statistics from January 2010, there are 73 million people using mobile phone services in China. Secondly, research done by Google shows that 60% present of new cell phone users will come from Asia and it is therefore becoming more and more important to understand China’s Mobile Telecoms market. This article will be the first one of a series to try to help you got a better idea about how the new 3G policy changed the market share of China Mobile, China Unicom and China Telecom; what kind of cell phones are the most popular ones; what the Chinese use their cell phones for; what differs in cell phone use between cities and the country as a whole; what aspects are the most complained about, as well as the close relationship between the Telecom companies and China’s national security department.

How the new 3G policy changed China’s Telecommunications market

Since January 2009, the 3G license was first released to the three China state-run Mobile companies: China Mobile, China Unicom and China Telecom. China Mobile gained 3,900,000 3G subscribers which is just a little bit more compare to China Unicom’s 3,595,000 and China Telecom’s 3,005,000. You may think those number are enormous but the truth is that there are more than 90% of 3G network users using the 3G service on a 2G device or even on a PC and have no idea about what they could do with this brand new 3G network(in “How the Chinese use their cells”).

How did this happen? To help you understand this typical Chinese phenomenon, here’s a small lecture about the 3G network and a brief history of the three tycoons. Before 2009, there were 7 state-run companies competing in China’s Mobile Telecoms market. They dominated different sectors, with China Telecom dominating the southern parts of China, China Unicom dominating the northern parts of China and China Mobile dominating the mobile phone handset market and no competition between them. In order to accelerate competition and stop wasting money on rebuilding the 3G networks, the Ministry of Industry and Information Technology (MIIT) reorganized these 7 conglomerates into the 3 nationwide tycoons: China Mobile, China Unicom and China Telecom.

China Mobile seems to have the worst standard pursued in China by the Chinese Academy of Telecommunications Technology (CATT), Datang and Siemens AG as an alternative to W-CDMA and an attempt to not depend on western technology, but has retained its GSM customer base. China Unicom retained its GSM customer base but relinquished its CDMA2000 customer base, and launched 3G on the globally leading WCDMA (UMTS) standard. The CDMA2000 customers of China Unicom went to China Telecom, which then launched 3G on the CDMA2000 1x EV-DO standard. This meant that China would have all three main cellular 3G technology standards in commercial use. Finally in January 2009, MIIT was awarded licenses for all three standards，TD-SCDMA to China Mobile, WCDMA to China Unicom and CDMA2000 to China Telecom.

These three standards both have highlights and disadvantages, which theatrically made those three new tycoons have the same basis from which to launch their 3G network services.

China Mobile with its TD-SCDMA has the biggest GSM customer base of 52.7 million out of 73.6 million as can be seen in the statistics from January 2010. But the TD-SCDMA standard doesn’t have many dives to run it, as China is the only country using it so there won’t be many factories interested in making suitable dives for a much smaller market compared to the worldwide standards W-CDMA and CDMA2000. China Unicom got the super hot worldwide standard of W-CDMA to help its customer base increase and a not so great deal with iPhone which really hasn’t sold a lot(due to the missing WiFi module). Still its endless negotiations with Apple and rumors may be a plus to its future developments, but it lost the entire CDMA customer base to China Telecom with only some GSM customers left making up far less in numbers than the other two companies. China Telecom was the weakest competitor among them, but has got the evolutionary standard CDMA2000 which has a huge advantage compared to the revolutionary standards TD-SCDMA and W-CDMA that aren’t backwards compatible to pre-existing 2G networks in that it only needs software updates whereas the revolutionary standards require huge investments to build all-new networks and frequency allocations as well as to maintain the old 2G network systems not to mention the GSM customer base transfer from China Unicom. Those facts together make China Telecom a tough opponent to deal with.

From the above you may get a brief idea about the current mobile market situation in China. Stay tuned as next week will bring you part two.