China Telecom’s decision to review its Rmb 100 million (US$14 million) creative business comes at a turbulent time for the mainland’s mobile industry.
The sector is being overhauled following a Government decree in May. China’s six telcos were ordered to become three, with mobile giant China Mobile absorbing struggling China Tietong. China Unicom, the second biggest by market share, will join third-biggest China Netcom (a fixed-line and broadband specialist), with a third player to come from the merged entity of some Unicom assets with fixed-line China Telecom.
What does this reorganisation mean for China’s booming digital and mobile industry? And will it finally open up mobile as a marketing medium?
1 China Mobile is by far the world’s biggest mobile telco, both in terms of network scale and subscribers - 428.9 million at the end of August. With its superior voice network based on GSM, wide coverage and a tradition of providing good customer service to high-value clients through its GoTone brand, China Mobile has outpaced its competitors. Brands such as China Unicom struggled because the regulator decided it should develop a network based on CDMA technology. This has since been surpassed as the standard for voice calls but remains an excellent option for transmitting data. By the end of August, Unicom had 129.5 million GSM subscribers and 42.4 million CDMA subscribers.
2 Heavy-handed meddling in the market has not previously worked but splitting up the telcos’ resources, hiving off parts of loss-making companies to richer ones that can afford it and shuffling management, may boost the channel’s growth, benefiting all.
According to Gartner IT research director Sandy Shen, the reorganisation “aims to address China Mobile’s dominance and Unicom can finally focus on developing a single network, which will boost efficiency.”
The upshot should be all market players gaining access to all parts of the telco ecosystem, allowing convergence plays across mobile and fixed-line. The reform was also designed to give players access to a 3G network, which should allow more consumers to enjoy applications such as games, mobile TV and high-speed browsing.
3 Former GroupM chief Quinn Taw, now a media and technology venture capitalist in Beijing, says the new entities may help boost acceptance of China’s home-grown 3G format, TD-SCDMA. Taw says Unicom will hope to make up ground on China Mobile with its 3G offerings.
But that is a long-shot in a developing market. “You have to look at what consumers do with their mobiles. Even in advanced countries like South Korea, most people just text,” he says.
4 A lack of infrastructure and affordable handsets for China’s 3G standard mean there have been huge delays in rolling out 3G marketing. David Turchetti, CEO at 21 Communications, says the company has taken part in 3G trials where the download speeds have been two to three times that of current 2.5G services.
“Before we roll out 3G marketing campaigns on a large scale for our clients, we need to see at least five to 10 million 3G users in the China market,” he said.
There are suggestions that Beijing may opt to jump to 4G but, either way, the real killer app for power users is wireless internet rather than mobile data. “It has made incredible inroads” in the big cities, says Taw, and it is here that old-school China Telecom has the upper hand. In March, it announced spending to put wireless throughout 21 provinces.
5 Tinkering cannot make up for a mobile ecosystem that is still missing vital elements, such as content. “What people don’t understand is that the ecosystem is complete in the US and UK. Here it is incomplete and most importantly there is no content that is worth anything at all,” says Taw.
Those comments are echoed by Turchetti. “Chinese operators are aware of the opportunity to service advertisers, but their lack of marketing competency has been a real stumbling block in launching compelling services,” he says. “We hope that competition will prompt operators to hire executives with real marketing talent so that we can build the industry together.”
What it means for...
Marketers
- The reorganisation will not affect mobile as a marketing medium overnight; it may, however, speed up its development.
- Once 3G hits critical mass, mobile will become a realistic option for marketers beyond simple SMS campaigns.
- Content will be key to opening up mobile, so brands should consider ways to offer users compelling content.
Agencies
- As the new-look telecoms players jostle for position, marketing and branding campaigns are likely.
- Building relationships with the new entities is crucial as mobile grows as a medium.
- China Mobile will continue to be the dominant player in the mobile space, but may at last face greater competition.
Got a view?
Email [email protected]
The sector is being overhauled following a Government decree in May. China’s six telcos were ordered to become three, with mobile giant China Mobile absorbing struggling China Tietong. China Unicom, the second biggest by market share, will join third-biggest China Netcom (a fixed-line and broadband specialist), with a third player to come from the merged entity of some Unicom assets with fixed-line China Telecom.
What does this reorganisation mean for China’s booming digital and mobile industry? And will it finally open up mobile as a marketing medium?
1 China Mobile is by far the world’s biggest mobile telco, both in terms of network scale and subscribers - 428.9 million at the end of August. With its superior voice network based on GSM, wide coverage and a tradition of providing good customer service to high-value clients through its GoTone brand, China Mobile has outpaced its competitors. Brands such as China Unicom struggled because the regulator decided it should develop a network based on CDMA technology. This has since been surpassed as the standard for voice calls but remains an excellent option for transmitting data. By the end of August, Unicom had 129.5 million GSM subscribers and 42.4 million CDMA subscribers.
2 Heavy-handed meddling in the market has not previously worked but splitting up the telcos’ resources, hiving off parts of loss-making companies to richer ones that can afford it and shuffling management, may boost the channel’s growth, benefiting all.
According to Gartner IT research director Sandy Shen, the reorganisation “aims to address China Mobile’s dominance and Unicom can finally focus on developing a single network, which will boost efficiency.”
The upshot should be all market players gaining access to all parts of the telco ecosystem, allowing convergence plays across mobile and fixed-line. The reform was also designed to give players access to a 3G network, which should allow more consumers to enjoy applications such as games, mobile TV and high-speed browsing.
3 Former GroupM chief Quinn Taw, now a media and technology venture capitalist in Beijing, says the new entities may help boost acceptance of China’s home-grown 3G format, TD-SCDMA. Taw says Unicom will hope to make up ground on China Mobile with its 3G offerings.
But that is a long-shot in a developing market. “You have to look at what consumers do with their mobiles. Even in advanced countries like South Korea, most people just text,” he says.
4 A lack of infrastructure and affordable handsets for China’s 3G standard mean there have been huge delays in rolling out 3G marketing. David Turchetti, CEO at 21 Communications, says the company has taken part in 3G trials where the download speeds have been two to three times that of current 2.5G services.
“Before we roll out 3G marketing campaigns on a large scale for our clients, we need to see at least five to 10 million 3G users in the China market,” he said.
There are suggestions that Beijing may opt to jump to 4G but, either way, the real killer app for power users is wireless internet rather than mobile data. “It has made incredible inroads” in the big cities, says Taw, and it is here that old-school China Telecom has the upper hand. In March, it announced spending to put wireless throughout 21 provinces.
5 Tinkering cannot make up for a mobile ecosystem that is still missing vital elements, such as content. “What people don’t understand is that the ecosystem is complete in the US and UK. Here it is incomplete and most importantly there is no content that is worth anything at all,” says Taw.
Those comments are echoed by Turchetti. “Chinese operators are aware of the opportunity to service advertisers, but their lack of marketing competency has been a real stumbling block in launching compelling services,” he says. “We hope that competition will prompt operators to hire executives with real marketing talent so that we can build the industry together.”
What it means for...
Marketers
- The reorganisation will not affect mobile as a marketing medium overnight; it may, however, speed up its development.
- Once 3G hits critical mass, mobile will become a realistic option for marketers beyond simple SMS campaigns.
- Content will be key to opening up mobile, so brands should consider ways to offer users compelling content.
Agencies
- As the new-look telecoms players jostle for position, marketing and branding campaigns are likely.
- Building relationships with the new entities is crucial as mobile grows as a medium.
- China Mobile will continue to be the dominant player in the mobile space, but may at last face greater competition.
Got a view?
Email [email protected]
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