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Mobile Tech Penetration
| Contents |
1. General Information |
1. General Information
1.1 China Mobile Market
The Chinese telecommunications market is the largest in the world. The 6 main operators of the Chinese Telecommunications market are: China Telecom, China Netcom, China Mobile, China Tietong (formerly China Railcom), China Satcom and China Unicom. At the same time, China Mobile is the world’s largest mobile operator by subscribers (457.3 million by December 2008).
In 2008, the financial crisis caused the global mobile phone market to experience slow growth. Faced with an undesirable situation, the Chinese mobile industry expanded into local and foreign markets, and seek technological upgrades. This has allowed the mobile phone market in China to remain relatively stable. In 2008 , China had about 641 million mobile users, or 47.3 per 100 persons. As compared to 2007, mobile phone user base increased by 93.924 million and 6.2 per 100 persons.
In 2008, global mobile phone handsets production totaled 1.18 billion. China accounted for 47.5% of total production.
1.2 Industry Trends (2004 to 2011f)
2. Consumer Behavior and Trends
2.1 Content Consumption Patterns
The consumption of mobile entertainment is a prominent trend amongst the Chinese. In November 2007, 34.8% of Chinese mobile subscribers reported listening to mobile music. In addition, 15.2% of Chinese mobile subscribers sent or received photos or videos through their mobile phones.
| Percentage of Mobile Subscriber Monthly Consumption of Content and Applications M:Metrics Benchmark Survey: November 2007 | |||||||
| US | FR | DE | IT | ES | UK | China | |
| Watched video | 4.2% | 5.0% | 2.5% | 6.0% | 7.7% | 5.1% | 0.9% |
| Listened to music | 5.7% | 12.9% | 15.0% | 13.3% | 20.0% | 18.9% | 34.8% |
| Accessed news/info via browser | 12.6% | 9.2% | 5.2% | 7.6% | 7.5% | 15.5% | 6.1% |
| Played downloaded game | 9.1% | 4.0% | 7.6% | 8.7% | 13.0% | 11.0% | 10.0% |
| Accessed downloaded application | 4.2% | 1.3% | 2.2% | 4.0% | 2.5% | 3.3% | 2.4% |
| Sent/received photos or videos | 20.5% | 24.3% | 21.7% | 31.3% | 31.7% | 29.7% | 15.2% |
| Purchased ringtones | 9.7% | 4.3% | 4.2% | 4.6% | 4.6% | 3.7% | 4.4% |
| Used email | 11.6% | 6.7% | 6.9% | 10.2% | 9.0% | 9.1% | 2.5% |
| Accessed social networking sites | 3.6% | 1.7% | 1.4% | 1.9% | 2.4% | 3.6% | 2.2% |
| Source: M:Metrics, Inc., Copyright © 2008. Survey of mobile subscribers. Data based on three-month moving average for period ending 30th November 2007, mobile subscribers in France, n = 12,867 Germany, n = 15,700; Italy, n = 13,107; Spain, n = 12,877; United Kingdom, n = 15,588; United States, n = 33,237, and the cities of Beijing, Shanghai, Guangzhou, Shenyang, Chengdu, Wuhan and Xi'an for the three-month average ending 31 December 2007 n=5,163. | |||||||
While Nokia mobile phones command market share in Chinese mobile markets, Sony Ericsson mobile phones are driving content consumption.
| Percentage of Mobile Subscriber Monthly Consumption of Content and Applications by OEM M:Metrics Benchmark Survey: December 2007 | ||||||
| Market | Motorola | Nokia | Samsung | Sony Ericsson | LG | |
| Any news or info | 6.1% | 6.0% | 6.7% | 4.9% | 11.8% | 3.0% |
| Played downloaded games | 10.0% | 8.3% | 11.9% | 5.7% | 24.1% | 9.5% |
| Sent/received photos or videos | 15.2% | 13.7% | 18.6% | 12.2% | 26.6% | 19.0% |
| Purchased ringtone | 4.4% | 3.6% | 4.7% | 5.3% | 7.1% | 2.9% |
| Listened to mobile music | 34.8% | 32.4% | 36.7% | 31.1% | 59.6% | 41.8% |
| Source: M:Metrics, Inc. Survey of Chinese mobile subscribers in Beijing, Shanghai, Guangzhou, Shenyang, Chengdu, Wuhan and Xi'an for the three-month average ending December 2007. n=5,163 | ||||||
2.2 Accessing the Internet via Mobile Phones
In 2008, the number of Netizens accessing the internet via their mobile phones have reach 117.6 million.
Source: CNNIC 23rd Statistical Report
For the Chinese mobile community, the top 10 sites visited by the Chinese on their mobile phone are as follows (September 2009):
Source: Opera: State of the Mobile Web
- kong.net
- baidu.com
- google.cn
- sina.com.cn
- xiaonei.com
- qq.com
- hao123.com
- sohu.com
- operachina.com
- 3g.cn
3. Competitive Landscape
As of now, the telecom operators in China are exclusively Chinese: two fixed-line operators with nation-wide licenses - China Telecom and China Netcom - two mobile carriers - China Mobile (GSM) and China Unicom (GSM and CDMA)- as well as two minor players - China Satcom and China Tietong. The State has control and majority ownership of all of them. Most of them are financed in Hong Kong.
China Telecom operates mainly in the wealthy Southern provinces (including Shanghai and Canton) in addition to the less prosperous West. It runs domestic and international fixed-line networks and provides fixed-line voice, data, video, multimedia and information services. It compensates the lack of a mobile license by deploying PAS/PHS very successfully. A second focus point is broadband based on Ethernet and ADSL.
China Netcom operates in the Northern provinces (including Beijing) and provides broadband, WLAN, IP telephony and PAS/PHS services.
China Mobile not only operates basic GSM services but also value-added services such as General Packet Radio Service (GPRS) data transfer, IP telephony and multimedia. It ranks the first in the world in terms of network scale and customer base.
China Unicom is to date the only licensed full telecom service provider in China. Its services include fixed-line, mobile, IP telephony, data and internet. Furthermore, China Unicom is the third largest mobile operator in the world and the only one in China operating a CDMA network. It is concentrating its efforts on CDMA and little investment is expected in GSM.
China Satcom is licensed to engage in all kind of satellite related services such as transponder lease, domestic television broadcasting, public Very Small Antenna Aperture (VSAT) communications, video conferencing, data broadcasting, IP telephony and satellite based high-speed Internet access.
China TieTong is a smaller company.
3.1 Mobile Penetration (2004-2007)
China Telecommunications Key Indicators August 2009 Source: Operations Bureau(运行局) | ||
| Item | Number in 2009 (in 10,000s) | Change from 2008 (in 10,000s) |
| No of Local Telephone Subscribers | 32,598.1 | -1437.9 |
| No of Local Telephone Subscribers: Urban | 22,067.9 | -1087.9 |
| No of Local Telephone Subscribers: Urban: Residential | 13,450.3 | -2138.0 |
| No of Local Telephone Subscribers: Rural | 10,530.1 | -349.9 |
| No of Local Telephone Subscribers: Rural: Residental | 9177.3 | -434.9 |
| No of Mobile Phone Users | 71,050.4 | 6925. |
| Local Telephone Penetration Rate | 24.9% | |
| Mobile Phone Penetration Rate | 52.5% | |
4. Tech Infrastructure : Mobile Technologies
4.1 Network Structure
China is the largest GSM market in the world with all of its provinces (including over 261 cities) covered with GSM network. China Mobile Limited and China Unicom Limited are the major GSM operators in China. GSM continues to dominate China's mobile market, but its market share is seem falling from 81% in 2007 to 74% in 2008.
In contrast, the 3G network spots a growth from 7% in 2007 to 12% in 2008 and is expected to continue growing. China utilizes their homegrown 3G standard, TD-SCDMA, which China Mobile helped develop. The Chinese government announced it would issue 3G licenses to the country's three state-owned mobile phone carriers. China Mobile, the dominant provider by far, received the license for TD-SCDMA, while China Unicom and China Telecom were given licenses for international standards used in Europe and the United States.
In order to attract more new customers, in April 2003, China Unicom introduced nextgeneration CDMA2000 1x service for highend market and prepaid offering for low-end market. CDMA2000 1x network signaled a move towards 2.5G network. Through the brand name ‘U-Max’ by China Unicom, CDMA2000 provides value added services, such as:
- A colorful multimedia email service
- Broadband service
- Interactive communications based on Wireless Application Protocol (WAP)
- Binary Runtime Environment for Wireless (BREW)
- Java technologies and gpsOne (Global Positioning System) service
Source: CNNIC
4.2 Personal Handy-phone System (PHS)
Personal Handy-phone System (PHS), also know as Xiaolingtong (小灵通) in China, is the most widely deployed local access mobile network system in China. PAS is also known as ‘Little Smart’. PHS has the mobility functions integrated into the existing fixed access network, but with limited mobility capabilities.
PHS handset has 800 hours of standby battery capacity and up to 6.5 hours of talk time. It supports 32Kb/s data transmission, which can be upgraded to 64Kb/s. Per minutes charges of PHS calls is as low as one-quarter to one-fifth the rates for regular mobile calls. Little Smart is a major threat to the mobile market. China’s two fixed line operators, China Telecom and China Netcom entered into the mobile market with the introduction of Little Smart.
Little Smart, initially introduced for people in rural areas was then brought into the city in 2003 when China Netcom introduced Little Smart operation in Beijing. On 25/7/06, Beijing Unicom cancelled the basic monthly charges for Little Smart and introduced new packages, which effectively cut its fees.
4.3 Fourth Generation (4G) mobile
WiMAX
WiMAX is a standards-based wireless technology that provides high-throughput broadband connections over long distances. WiMAX is a kind of wireless broadband technology, with better efficiency but lower cost than 3G. It adopts the IP broadband technology and the wireless access technology, supporting the access to IPbased fixed, roaming and portable services. Comparing with the 3G technology, WiMAX has many advantages.
The wireless signal transmission distance of the WiMAX base station is 50 km, and its network coverage acreage is ten times higher than that of 3Gtransmission tower. The continuous delay in the issue of 3G license has made the China telecommunication operators to salivate after the WiMAX market. China Unicom will complete its WiMAX tests in five places in 2006, including Guangdong, Shanghai and Dalian and begin to construct WiMAX network after the tests.
According to China Unicom, WiMAX will be adopted in the industrial application area, such as government and environmental protection and will be applied in the places where optical fibers cannot reach, and become a supplement to 3G.
5. Regulatory Environment
5.1 Price wars
Following the booming mobile market and battle for retaining and increasing mobile market share, China Unicom and China Mobile were offering various kinds of promotional prices that were below the permitted level under the state controlled tariff regime. As a result, the actual rates paid by China’s mobile subscribers fell 20% on average in 2002 with the use of discounting plans and Internet calling cards.
Even though the Chinese government has given the approval for China Unicom to set prices at 10% below the pricing of China Mobile, China Unicom’s margin was still under pressured as the price discounts by China Mobile since 2001 of 50% to 70% have gone way below China Unicom’s prices.
Starting 2004, China Mobile offered a prepaid plan to budget users, whilst launching a combination of cheap call plans and subsidized phones to users changing networks from China Unicom’s CDMA network. To cut losses and appease investors, China Unicom has halted the subsidies of free handsets for new CDMA subscribers starting 2005 and turned its attention to GSM, which has maintained steady growth. This further showed that CDMA services could not compete with GSM services.
Duopoly of China Unicom in CDMA and GSM is a setback in China mobile market. In the first half of 2006, market reports showed that CDMA service subscribers fell 1.3 percentage points and its profit margin was down 3.3 percentage points. In June 2004, MII imposed priced regulations that require operators to gain approval for new tariff promotion plans. Mobile providers and Little Smart must charge higher rates than fixed line providers.
5.2 Subscriber Registration
Currently, among the 388 million cell-phone users in China about 200 million are prepaid subscribers. Though China imposes stringent restrictions across almost all media and communications sectors like broadcasting, media, Internet and the like, its mobile-telephony laws are comparatively lenient. For instance a mobile-phone customer can walk into a vendor and get mobile service without registering personal information at all, a practice unheard of in most countries.
Only those who pay afterwards ("post-paid subscribers" in industry parlance) are asked to register their ID information upon subscription. This practice has also encouraged a fair amount of fraud and criminal activities involving the use of pre-paid mobile phones. Thus, in a bid to curb rampant spam and growing fraud conducted over mobile services, China will speed up creation of a new telecom law that will insist on all mobile-phone subscribers to register using their real names.
For more details please go to: http://www.physorg.com/news10047.html
5.3 Calling Party Pays (CPP)
The CPP policy would allow China’s mobile users to enjoy lower costs. Regulators adopted the existing billing model when China Mobile and China Unicom were set up in the 1990s because the companies needed extra revenue to support the construction of nationwide networks. The system continued to prevent price wars that might undermine their financial health. Now, with the mobile sector rapidly maturing, policymakers and consumers believe the mobile operators can afford to move to CPP.
CPP is expected to have the largest impact in big cities where, due to wider profit margins and larger user numbers, the two operators have stuck strictly to the two-way billing system. In some smaller cities the operators have already launched discount packages that effectively amount to one-way billing.
China Mobile and China Unicom averaged an ARPU of US$ 9.12 per month in the first half of this year, compared with US$ 8.24 for fixed-line operators, the MII said – and the gap is widening. CPP could lead to a further reduction in fixed-line revenues. China Telecom and China Netcom fear the impact of lower-cost mobile services on their personal handyphone system, a geographically limited service that competes with mobile services.
For further info, please go to: http://www.conformity.com/PDFs/A07/A07_F21.pdf or http://www.conformity.com/artman/publish/printer_183.shtml
References:
1. BuddeBlog. China the largest telecoms market in the world. May 2008. Retrieved May 15, 2008 , from website: http://www.buddeblog.com.au/china-the-largest-telecoms-market-in-the-world/
2. Wikipedia. China Mobile. Retrieved May 15, 2008 , from website: http://en.wikipedia.org/wiki/China_Mobile
3. Embedded Star. China Mobile Market to Grow to Over 580 Million Subscribers by 2010. April 2005. Retrieved May 12, 2008 , from website: http://www.embeddedstar.com/press/content/2005/4/embedded18249.html
4. BusinessWeek. China's Big, Really Big, Mobile Market. July 2007. Retrieved May 18, 2008 , from website: http://www.businessweek.com/globalbiz/content/jul2007/gb20070725_626102.htm?chan=top+news_top+news+index_global+business
5. Research and Markets. China Telecom Analysis (2008-2012). May 2008. Retrieved May 17, 2008 , from website: http://www.researchandmarkets.com/reportinfo.asp?cat_id=330&report_id=603594&q=China&p=1
6. China Trade in Services. Analysis of the Structure of China’s Telecom Industry. November 2007. Retrieved May 27, 2008 , from website: http://tradeinservices.mofcom.gov.cn/en/e/2007-11-29/13657.shtml
7. BuddeComm. 2008 Asia - Telecoms, Mobile and Broadband in China. Retrieved 18 May, 2008 , from website: http://www.budde.com.au/buddereports/4563/2008_Asia_-_Telecoms_Mobile_and_Broadband_in_China.aspx?sub=EXECUTIVE
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