Date
18 November 2017
China Mobile needs to open up to a new way of doing things to thrive in the 4G era. Photo: Bloomberg
China Mobile needs to open up to a new way of doing things to thrive in the 4G era. Photo: Bloomberg

Tune in, China Mobile, and think on new 4G wavelength

China Mobile (00941.HK), the nation’s biggest mobile operator by user base, is betting on its 4G rollout to regain share in the high-speed mobile broadband marketUsing homegrown TD-LTE technology, the state-owned giant is partnering with Apple Inc to deploy the iPhone 5s and 5c to counter rivals China Unicom (00762.HK) and China Telecom (00728.HK). 

But, for China Mobile to succeed long-term, it will have to realize that mobile operators can’t challenge the internet by keeping its network fenced off just for its home-grown value-added services. It will have to shed its outdated I-can-do-it-all mentality and closed-network mindset to adapt to the changing rules of the mobile internet game.

China Mobile management, however, still clings to its time-honored ways, hoping that its 700 million-strong subscriber base can give it the momentum to keep going it alone. It’s waged an aggressive expansion campaign beyond network operations in the past few years, establishing its own services, from mobile reading to mobile messaging and even voice-over-internet protocol services — only to see most of them swept away by open online offerings. 

One of the new rules of the game is that third-party downloadable applications now easily replace the killer apps like voice and text messaging that used to be a cornerstone of network operations. Music services like downloadable ringtones, for example, were cash cows for China Mobile in the 2G era and important sources of non-voice income.

But now subscribers can use their smartphones to download a wide range of mobile music apps from platforms such as Tian Tian Dong Ting, which has more than 300 million people lining up to use its free services, rendering China Mobile’s equivalents obsolete.

Another example is Feition, a mobile chat app developed by China Mobile in 2007 as a competitor to Tencent Holdings’ QQ platform. In the 2G world, China Mobile could lock its customers out of QQ’s free text service, but in the mobile internet world users can access all areas with a data package. Feition failed to lure QQ users and fell even farther behind after Tencent launched its WhatsApp-like Weixin service.

There’s more than enough evidence that China Mobile’s ambitious app development efforts have failed to meet their goals of creating user stickiness and diversifying revenue stream. China Mobile would instead be better off reinventing itself as the preferred partner for app developers. It could provide technical or marketing support to outside developers to deliver their applications to more users, profiting through new business models such as joint ventures and revenue sharing.

The Mobile Market platform China Mobile launched in 2010 could play an important role on this transformation. Mobile Market is an Apple App Store-like outlet for Chinese developers that’s based on a revenue-sharing model. Its openness could help China Mobile secure a strategic position in mobile internet, leaving management free to focus on building the network needed to cope with rising data traffic.

– Contact us at [email protected]

SK 

EJ Insight writer

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