Re: SIM Cards in China
>> CHINA'S SIM CARD GOLD RUSH
Card technology
July/August 2000 edition
cardtech.faulknergray.com
China is the world's biggest GSM mobile phone market, and it is getting bigger fast. Chinese GSM operators will order 40 million subscriber identity module smart cards this year, double that of 1999, predicted sources at the recent Smart Cards China 2000 show in Beijing. That matches the growth of the red-hot GSM market in Europe.
Perhaps as significant is the move by the country's two largest mobile phone operators, China (Telecom) Mobile and China Unicom, to offer a list of extra services to customers, from stock and weather reports to mobile banking. The mainland operators are starting to roll out higher-end SIM toolkit cards, like those popular in Europe. Both have also launched Internet service using standardized WAP phones and plan to expand their pilots across several of the country's provinces.
Except for the competitive hotbed of Hong Kong, where six operators vie for business among the district's roughly 6 million residents, SIM toolkit has been largely absent from China. About 80% to 90% of the SIM cards that manufacturers ship to China this year will be simple 8-kilobyte cards, used to identify customers when they make phone calls, say vendors. But in the next two to three years, 80% of the cards ordered by the largest operator, China Mobile, will be SIM toolkit, predicts Yang Yanhui, smart card manager for Beijing-based SIM card shipper Datang Telecom Technology Company Ltd.
"They have competition, so they are focusing on service," says Yang, on China Telecom's challenge from China Unicom.
Unicom plans to spend US$3.5 billion, on its network this year, expanding its reach to 300 cities, according to the China Daily newspaper. The telecom has been adding 200,000 subscribers a week since January and expects to top 13 million subscribers by year's end, up from a little more than 5 million at the end of 1999. It now has 10 million customers, still less than a quarter of China's GSM customers.
Unicom plans to extend its WAP pilots to 50 cities, from 20, and is considering introducing Internet service modeled after Japan's i-mode phone that has attracted more than 5 million customers, says the China Daily.
Unicom announced earlier this year plans to build a new network based on CDMA technology, but later put off the move until the next generation of cell phones are ready in a few years. However, Unicom helped push forward the adoption of SIM cards for CDMA phones, which now store subscriber information in the handset.
The government-owned telecom will pay for its expansion with proceeds from an initial public offering in New York and Hong Kong, which was expected to raise more than $5 billion last month. The shares will equal about 25% of the company, and the telecom will remain firmly under state control, as does China Telecom, which raised $4.5 billion from outside investors in 1997.
China Mobile has matched Unicom's growth, adding 15 million new customers over the past 12 months to more than 40 million customers, says Sun Yan Yan, a senior engineer at the telecom. Some estimates place China Mobile's customer base lower, but Sun's projection that China Mobile will top 50 million customers by the end of the year seems on target.
As in Europe, the market for prepaid customers in China is growing rapidly. Since introducing prepaid service last year, China Mobile already has added 15 million prepaid customers, Sun says.
She attributes the popularity of GSM in China to low prices for phones and service, including rates of about 5 cents per minute. Moreover, customers can get connected to a GSM network almost immediately, provided operators have installed cell towers in their cities or areas. By contrast, it can take months for residents to get fixed-line telephone service.
Given the market at stake-some projections say China will top 200 million GSM customers within 5 years-it is not surprising the two large operators are rolling out new services to attract customers.
This spring, China Mobile started offering customers mobile banking, including bill paying and funds transfers, using high-end SIM cards with 32 kilobytes of application memory running Java Card software. The software, from Sun Microsystems Inc., is designed to let the telecom more easily add applications over the air to cards in the customers' handsets.
Still, even this year, 32K cards will be scarce, not more than 5% of total shipments in China, estimates Steven Currie, who heads the Beijing office of German card manufacturer Orga Kartensysteme GmbH. That will change next year, however, because of the expected popularity of such SIM toolkit applications as mobile banking and perhaps stock trading, which require more than 16K of application memory or EEPROM (electrically erasable read-only memory), Currie says. "The jump is going to be straight from 8K to 32K," he says.
European manufacturers may not dominate China's exploding SIM card market in a few years, as they have in the past. China Mobile would like to see Chinese companies, such as Datang Telecom, fill its orders.
Boosting The Home Team
Whether the state-owned telecom can skirt international trade agreements to do this is another question. But it is clearly encouraging the Chinese-based companies. For example, Beijing Areo Z-Tone Electronic Company Ltd. will get a "quota" of at least 1 million SIM cards this year from China Mobile and perhaps as many as 6 million to 7 million cards, depending on chip availability, says Yao Tian Hong, company president.
Yao puts the reason behind the preferences this way: "You have the Chinese language," he says. "You have to give technical service." <<
- Eric - |
