China Unicom, China Telecom Sign Cooperation Agreement

China Unicom has signed a cooperation agreement with China Telecom. The two operators say they plan to build a new industry paradigm through open cooperation and resource-sharing (including networks, business and services) as well as exploring cooperation at various levels. The two partners also plan to promote structural reform on the supply side, with regard to networks and handsets. With this agreement, China Unicom and China Telecom hope to reduce costs while improving operating efficiency and to provide better networks and services to customers. By doing so they will support the Chinese government’s “Internet Plus” strategy, which is supposed to promote better internet access across the country. During times of major disasters and emergencies, the two operators will help each other’s business recovery, with a view to increasing their ability to safeguard emergency communications. China Unicom and China Telecom intend to expand their handset offerings and to jointly promote six-mode handsets with all-network access as a national standard. They will also enhance network interconnection quality and upgrade the quality of international roaming service through joint cooperation with overseas operators. China Unicom and China Telecom currently lag very far behind the number-one operator, China Mobile, which has over 825 million customers, of which over 287 million are 4G/LTE users. China Unicom, on the other hand, has only 180 million customers, while China Telecom has 141 million. We believe that while structural reforms are necessary, the agreement on the part of the number-two and number-three operators to join forces has been made with the intention of mounting a better challenge to the market leader. However, China Mobile’s dominance is so extreme that it is not likely that the move will put a significant dent in it—so much the more so because this is not a merger but only a cooperation agreement. Nonetheless, the promotion of a national standard for smartphones by the two operators will likely put pressure on China Mobile to adopt it as well, and to some extent will level the playing field and make 2G, 3G and 4G networks equally accessible across the country. Users would benefit from a standardized smartphone environment, because SIMS that are fully interchangeable across operators would make it easier to switch providers without buying a new phone. That would lead to increased competition and more customer freedom.  Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile, fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To learn more about Tarifica, please visit www.tarifica.com

Xiaomi Launches Its Own Mobile Service in China

Chinese handset maker Xiaomi has launched its own mobile service in China. The service, called MiMobile, offers a SIM that works over China Telecom’s 2G/3G/4G network. The prepaid service charges CNY 0.10 (US $0.016) per minute, text or MB, and customers can also subscribe to a bundle of 3 GB data for CNY 59.00 (US $9.25) per month. Users also receive free roaming across China and free incoming calls. Xiaomi announced the new service at the presentation of its latest smartphone for the Chinese market, the Mi 4c, which will be priced at CNY 1299.00 (US $203.64) for 2 GB RAM and 16 GB storage or CNY 1499.00 (US $234.99) with 3 GB RAM and 32 GB storage. The Mi 4c also supports infrared technology to replace common remote controls, such as for a TV or air conditioner, and Xiaomi’s EdgeTap technology to perform common functions with a simple tap of the phone. Xiaomi has been making worldwide waves with its smartphones, in overseas markets such as India, where expanding demand for data has driven demand for budget-priced devices. Now the aggressive manufacturer is expanding in a different direction by offering mobile service of its own as an MVNO, running on the network of China Telecom. Competing in China’s mobile market seems like a logical next step for Xiaomi. Offering the service via SIM will make it available as widely as possible, but MiMobile can also be seen as a way to drive device sales within China, where they have lately been doing less well than abroad. Users who do not have a 4G/LTE handset may be motivated by Xiaomi’s generous prepaid MVNO offer to upgrade to the new Mi 4c. Looking further ahead, the offer—even though it is on an MVNO basis—can be seen in the wider context of new challenges to the MNOs’ traditional offerings. Another handset manufacturer, Ericsson, recently announced that it will be offering voice calling via its own Wi-Fi-only devices. While we are not privy to Xiaomi’s future plans, offering OTT voice services tied to their devices would be an even more decisive end run around the MNOs.

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China Leads Global M2M Market

China is the world’s largest M2M market, with 74 million connections at the end of 2014, a figure that represents almost a third of the global base. The country has become the global leader in the deployment of the Internet of Things (IoT), according to GSMA Intelligence, the research arm of the GSMA. Researchers forecast that this figure will grow to 336 million by 2020, representing a compound annual growth rate of almost 29 percent. China has benefited from proactive government support in the development of the IoT, with funding allocated as part of the country’s 12th Five-Year Development Plans and additional funding made available for research and development, the report said. The central government has also selected 202 cities, including Beijing, Guangzhou, Hangzhou and Shanghai, to pilot smart-city projects to collect, store and analyze information related to transportation, electricity, public safety and environmental factors. The report indicates that China’s mobile operators—China Mobile, China Telecom and China Unicom—are at the vanguard in the development of the IoT and are moving from a business-to-business focus to offering more sophisticated consumer-oriented propositions via partnerships with other companies such as automotive manufacturers and wearables companies.   We are not surprised at the results of the GSMA’s survey. China is the world’s largest mobile market (over 1.25 billion users), and the three operators have clearly invested heavily in developing IoT connectivity and leveraging their huge base to maximize the number of connections. And with the growth rate in China’s mobile market slowing steadily, it is strategically sound for the operators to seek new sources of revenue, including M2M, and to aim at expanding M2M beyond its traditional business-to-business purview and into the consumer sector. In fact, it is worth bearing in mind that the IoT is an extension of the M2M concept, broadened by the range of devices involved, and this broadening becomes possible because of the inclusion of the consumer market for systems such as connected homes and connected cars.   Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Click here to contact a Tarifica Analyst

China Telecom Expands Footprint to Africa, Middle East

China Telecom Global has established China Telecom (Africa and Middle East) as the regional headquarters in the African and Middle East region. CTG’s network capabilities currently cover the UAE, South Africa, Kenya, Egypt and Nigeria. The company plans to continue its network expansion across the region. In March 2015, CTG sealed the deal with Wananchi Group, East Africa’s leading telecom operator,for the National Optical Communication Infrastructure in Malawi, which spans a 428 km-wide area.China Telecom (Africa and Middle East) will oversee all the market development, network construction, business development and management of subsidiaries in the region, as well as assist multinational corporations—in particular Chinese corporations—to grow their presence in the area. 

China Telecom, having won the Wananchi contract, is now leveraging that achievement to try and make itself a major player in the African and Middle East region generally. Many areas in this region—East Africa in particular—are open fields for a foreign operator like China Telecom, since they currently have notably underdeveloped mobile network infrastructure.Added to this revenue opportunity is the fact that the significant presence of Chinese companies doing business in the African and Middle East region constitutes a ready-made market for China Telecom’s services, which will be attractive not only because of offering high-quality connectivity in the overseas countries but also, presumably, offering seamless integration with services the companies would use in China.“It is a significant milestone for this China-based global company to reinforce its business expansion in the region,” China Telecom Group said in a statement.That expansion may be especially strategic in light of the fact that while China Telecom is the number-one operator in China in the declining fixed line sector, it is ranked third in the growing mobile market.  

Tarifica is the leader in monitoring and analyzing telecom pricing, covering hundreds of operators in every region of the globe. Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Click here to contact a Tarifica Analyst.

China Telecom, Alibaba Partner to Sell Smartphones

China’s third-largest mobile operator, China Telecom, has partnered with Chinese e-commerce giant Alibaba to sell inexpensive smartphones to consumers who live in the country’s smaller cities and rural areas. Through this partnership, Alibaba will have access to China Telecom’s 186 million subscribers. The mobile phones, called Tianyi Taobao Shopping Handsets, include six different models that come installed with an app enabling users to access Alibaba’s Taobao online shopping platform, or eight other models that will run Alibaba’s home-grown mobile phone operating system, YunOS, which will provide users with an Alibaba account for shopping, cloud-based storage and other preloaded services. The costs of the devices will range from CNY 299.00 (US $48.20) to CNY 699.00 (US $112.69), and purchasers of the handsets will receive four months of 2G data at no cost.

According to recent reports, China Telecom lagged behind the country’s other operators, particularly China Mobile, in increasing its subscriber growth in 2014. The operator attributed this to its inability to expand its 4G network coverage because the government had not granted the required licenses for FDD-LTE last year. Although FDD-LTE 4G licenses have now been issued and we expect the carrier to aggressively expand its 4G network coverage, China Telecom is smart to partner in initiatives that target its current 2G customers to increase their data use. While it is clear that Alibaba will win from this partnership—through increased retail sales from online shopping, as well as through the potential growth of its operating system YunOS—China Telecom could see increased revenue through customers’ demands for larger data packages, as this whole initiative stems from the rise of mobile shopping in China, especially in rural areas where shoppers are turning to the online marketplace more often.

“Targeting 2G customers may not seem like a good source of revenue for mobile operators, particularly in many developed markets, but the sheer size of China’s mobile market makes targeting this group of subscribers lucrative, especially if the operator has been slow to attract 3G/4G customers in areas where it has this infrastructure already built. Revenue from 2G service in the country’s rural areas is a good supplement until the China Telecom is ready to build out infrastructure in these areas.”

Kamely Hayes,

Managing Editor,

The Tarifica Alert

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: Click here.

Developments in Global Telecommunication

Asia/Pacific

China Telecom, the country’s smallest mobile operator, plans to launch an MVNO called CTExcelbiz in Australia this month. CTExcelbiz will target the Chinese population living in Australia, as it currently does for those living in the U.K. and France.

Europe

Telecom Italia Foundation and the Umberti Veronesi Foundation, a provider of grants for scientific research, have partnered to launch Well Up. The app, which can be downloaded at no cost for Android and iOS, educates users about their potential health risks and the steps they can take to prevent health-related problems. Users can receive information about nutrition, physical activity, check-ups and vaccines via the app.

Latin America

Mexican telecom company América Móvil has entered into a partnership with taxi app Uber to bring Uber’s service, which enables users to summon a car, to several countries in Latin America. In Mexico América Móvil’s mobile operator Telcel will offer its subscribers an Uber discount of MXN 150.00 (US $10.64) when they first use the app.

Middle East/Africa

Middle East mobile solutions provider Souktel has partnered with Bayt.com, the region’s leading career site, to launch an SMS service for professionals across Egypt. Users will be able to pose questions and receive answers regarding career advice via SMS. Egypt has a mobile penetration rate of over 100 percent; however, only 6 percent of Egyptians own a smartphone. This new service will ensure that non-smartphone users will have access to this information.

North America

U.S. mobile operator Verizon Wireless has partnered with SpiderCloud Wireless, a provider of scalable small cell enterprise radio access network (E-RAN) systems, to bring the first dual-band 4G small cells to its business customers. (Dual-band refers to small cells that pack two LTE bands into one node.) The solution addresses the need of providing reliable coverage and capacity inside buildings. Verizon has been trialing SpiderCloud’s multiband devices with its business customers for several months.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx