Delving into the decline in China mobile phone accounts

Ko Tin-yau March 25, 2020 09:31

China has three leading telecom operators, namely China Mobile, China Telecom and Unicom. All three of them have reported a drop in user numbers this year amid the coronavirus outbreak.

China Mobile reported that its user numbers fell by 860,000 and 7.25 million in January and February respectively, while China Telecom revealed a loss of 3.99 million users in the first two months. China Unicom, meanwhile, lost 1.08 million users in January alone.

In all, the three wireless carriers together lost roughly over 14 million mobile users in the first two months of 2020, which is quite striking.

There could be different explanations for the staggering figure. Some users may have passed away but the number can’t possibly be that high.

There has been speculation that amid the economic turmoil, people were giving up extra accounts they used to hold to separate business and private calls. Also, companies hit by the coronavirus crisis may have gone out of business in some cases, resulting in cancellation of phone accounts.

While explanations such as these do sound logical, industry veterans, however, believe the huge loss of mobile users largely has to do with dwindling of so called “water army”, a group of Internet ghostwriters paid to post online comments with particular purpose.

China has implemented real-name registration system for mobile users since 2016. All applicants must submit their ID document before getting a mobile number. But one can have up to five numbers with each telecom operator. That means one person can have as many as 15 mobile accounts.

Some would lease or sell their extra numbers to the "water army" who would use the accounts to facilitate their shady operations, such as faking likes for a eatery or certain movie star, or faking positive or negative commentaries about particular online shops, depending on the client’s request.

The three major telecom operators in China together had 1.6 billion accounts as of the end of last year, which is 45 percent more than the nation’s 1.1 billion-strong adult population. Part of that is a result of some people having more than one mobile account, part of that should be due to the existence of “zombie accounts”.

In the past two months, a large number of shops and restaurants were forced to shut down due to the virus. Advertising budgets were also generally slashed during this environment. Consequently, demand for services of the "water army" has diminished.

The pandemic has far-reaching impact on China’s economy, affecting all sorts of industries and even some gray sectors. If the mobile phone accounts start to grow again, that is perhaps a sign that the economy is coming back.

This article appeared in the Hong Kong Economic Journal on March 20

Translation by Julie Zhu

[Chinese version 中文版]

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RC

Ko Tin-yau

Hong Kong Economic Journal columnist