CDMA: Unicom's great tech hope
China Business Weekly
January 07,2003
Which standard is best for third-generation (3G) mobile telephone service?
The answer is out there somewhere.
China Mobile chose general packet radio service (GPRS) while China Unicom adopted the code division multiple access (CDMA) system.
Sinotrust Marketing Research and Consulting Co Ltd recently conducted a survey about the CDMA network and, more important, how the new mobile telecommunications system will affect the market.
Get a free handset
Wireless carriers in other countries commonly adopt deposit service fees and free cellphone offers. In Japan, it is difficult to buy a cellphone without a carrier's logo.
Neither China Mobile nor China Unicom had adopted such measures as of a few years ago.
Things started to change when CDMA was unveiled.
To promote this programme, Beijing Unicom spent nearly 10 million yuan (US$1.204 million) on advertising, according to Sinotrust's research.
Deposit service fees and free cellphone promotions are working well.
Sixty-three per cent of respondents have heard about CDMA, indicates Sinotrust's research.
About 10 per cent of respondents who had heard of CDMA suggested they might use the service by year's end.
Meanwhile, 38 per cent of respondents considering buying a handset said they might use CDMA.
Faced with similar challenges, China Mobile, China's largest mobile phone carrier, also implemented programmes aimed at enhancing customers' loyalty.
China Mobile launched the "multimedia messaging service (MMS)" based on GPRS; purchasers of GPRS cellphones recommended by China Mobile received free calls and accessory packages, and customers received up to 10 megabytes of free e-mail space.
Playing price game?
China Unicom is marketing CDMA differently than the global system for mobile communications (GSM), the survey shows.
China Unicom tried at the beginning of GSM to attract customers from China Mobile by offering service discounts, and subsequently became a low-end brand.
In addition, Unicom has a lower average revenue per unit (ARPU) compared with China Mobile. That concerns overseas investors.
In order to change the situation, China Unicom has pinned high hopes on CDMA.
The deposit service fees and free cellphone campaign are aimed at transforming direct discounts into indirect discounts.
The efforts appear to have two contradictory aims: Attracting high-end subscribers, and attracting price-sensitive subscribers.
Sinotrust's researchers predict CDMA's new subscribers will come from three groups: Current China Mobile subscribers; current China Unicom GSM subscribers; and potential CDMA subscribers.
The researchers predict more than half of the new CDMA subscribers will come from current China Mobile subscribers, while one-sixth of the subscribers will come from China Unicom's current GSM users.
As proof that China Unicom could undermine its GSM foundation by launching CDMA, the survey found between 4.5 per cent and 22.7 per cent of Unicom's current GSM users suggested they might change standards.
Meanwhile, up to one-third of the future CDMA subscribers could come from potential China Mobile subscribers.
About 70 per cent of residents in Beijing's eight districts own cellphones, Sinotrust's study shows.
Network construction
Where will the tens of billions of yuan needed for CDMA network construction come from? The capital market.
After its listing in the US and Hong Kong stock markets, China Unicom has finally found a way to list in the domestic market.
Sinotrust's study indicates that 37 per cent of current or potential mobile subscribers have heard about this development.
Business Weekly news
www1.chinadaily.com.cn |
