Date
22 September 2017
Ali Telecom, Alibaba's mobile virtual network arm, has launched its Qinxin service. Photo: Ali Telecom
Ali Telecom, Alibaba's mobile virtual network arm, has launched its Qinxin service. Photo: Ali Telecom

Virtual mobile players search for right business call

Ali Telecom, Alibaba’s mobile virtual network operator, is up and running with the launch of its Qinxin {親心} mobile phone service. The launch comes hard on the heels of similar moves by home appliance e-tailer Suning and electronic chain Telephone World, which have had numbers available for preorder since the start of this month.

The first batch of phone numbers will cover 29 cities, including Beijing, Shanghai and Chongqing. These numbers will begin with 1709 and run on 3G and 2G networks operated by China Unicom (00762.HK). Ali Telecom said the group will roll out networks run by China Mobile (00941.HK) and China Telecom (00728.HK) down the road.

The service will be available next month and preorders are limited to Taobao members. The billing details have yet to be released, but Ali Telecom said the fee structure will be the same for all regions and there will be no roaming charges.

The group said the tariff packages will be as simple as possible, with subscribers paying for what they use. “It is as simple as paying for a taxi ride,” Ali Telecom said.

Any minutes that aren’t used in any one month can be carried over to the next one.

Users have long complained that the fees charged by the three big carriers are too high. Despite the discontent, though, China’s virtual operators have failed to win the hearts of users.

Since the central government opened up the market in September, 19 firms have been granted virtual network licenses. Those players have generally sought an edge with lower tariffs but they have so far had few takers.

About 75 percent of users say they aren’t willing to switch to virtual networks because they can’t transfer their existing number to the new schemes, according to an iResearch report last month.

Cut-throat pricing is definitely not a sustainable strategy because the operators still have to cover the fixed cost of renting the network from the major carriers.

Snail Game, the first of the new operators off the rank, frankly admitted that some of its packages are losing money due to the high fixed costs. All of the virtual players who jumped onto the bandwagon are bleeding as well, Snail Game chief executive Shi Hai {石海} said.

Shi said the only way for them to make money is through value-added services. But that’s far from easy and if the situation continues, no one will be willing to go into the business within six months, he told Economic Information Daily.

– Contact the writer at [email protected]

SK

 

EJ Insight writer

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