Another FT article (from July 2001) about some weird wireless telecom stuff going on in China.
(This article was somewhat useful to me in naming all three of the wireless players in China :
China Unicom
China Mobile
China Telecom.
I still am amazed that I usually cannot remember the names of all three !)
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globalarchive.ft.com
COMPANIES & FINANCE ASIA-PACIFIC: Xiaolingtong rings changes
as China gets mobile habit: Competition is hotting up, say Joe Leahy
and James Kynge:
Financial Times; Jul 25, 2001
By JAMES KYNGE and JOE LEAHY
The rutted roads of Bao-ding, a dusty Chinese boom town two hours' drive
from Beijing, are hard on vehicles, particularly China's battered old ex-army
motorcycles.
"There are motorbikes breaking down all the time. You never know when
you're going to be called out to repair them," says Zhang Jiang Hong, a
local self-employed mechanic.
Not surprisingly, therefore, Mr Zhang takes his communications needs very
seriously. On his belt is a regular mobile phone, a pager and, last but not
least, a device known as "Xiaolingtong" (literally "smart little connector").
Based on Japan's Personal Handyphone System (PHS) technology,
Xiaolingtong is an unofficial mobile phone service that is revolutionising
communications for millions of middle to lower-income people in China's
smaller cities.
Unlike national mobile phone networks, which require expensive new
infrastructure, Xiaolingtong piggy backs on the local fixed-line network to
offer subscribers a service within the local city environs.
Provided by China Telecom, the fixed-line incumbent, the rebel service has
already attracted an estimated 1.5m to 2.5m subscribers nationwide,
industry sources say.
While network quality is relatively poor and there is no roaming between
cities, the service is cheap. Priced the same as a local call, or about half
that of a normal mobile phone, Xiaolingtong has allowed cost-conscious
small businessmen such as
Mr Zhang to cut in half their monthly phone overheads. Today he only turns
on his GSM mobile phone when he leaves Baoding. Otherwise, he uses
Xiaolingtong.
Not surprisingly, China's two licensed cellular operators, China Mobile and
China Unicom, are bitterly opposed to Xiaolingtong. To make up for
shrinking margins, the pair have been trying to speed up subscriber growth
among lower-income groups. Xiaolingtong poses a direct threat to this
strategy.
China Telecom has only been able to offer the service by exploiting grey
areas in China's telecoms regulations.
The Ministry of Information Industry, the telecoms regulator, formally allows
only two mobile licensees in China, meaning that Xiaolingtong is technically
illegal.
However, UTStarcom, the leading equipment provider for PHS-based
systems in China (and the inventor of the Xiaolingtong brandname), said the
ministry has issued an "internal notice" permitting the deployment of such
networks in small cities.
The situation, though confusing for outsiders, is not unusual in China,
particularly in the telecoms sector, where law-making can be chaotic.
"In China, the way the law develops is the government or a department
issues various directives in the newspaper and you basically have to cut
these out to find out what the progress of the law is," says Tony Corel, a
partner specialising in communications law at Squire, Sanders and
Dempsey in Hong Kong.
Xiaolingtong's uncertain legal status has effectively exempted it from the
expensive tariff regimes imposed on the official mobile phone operators,
under which calling and receiving parties are charged for each call.
While the total number of official mobile phone subscribers in China has
risen sharply - estimated at 116m at the end of June compared with 100m
at the end of March - China Mobile and Unicom's average revenue per user
has been declining.
ING Barings forecasts that industry leader China Mobile will earn a monthly
average of Rmb167 (Dollars 20) per subscriber in 2001, down by one-quarter
from last year, as more users opt for less-expensive pre-paid card services.
China has 70m pager subscribers, many of whom would conceivably switch
to Xiaolingtong if allowed, according to BDA (China), a Beijing-based
telecoms consultancy.
The rivalry erupted into the open last year in Lanzhou, a small Chinese city,
when China Mobile refused interconnection to China Telecom's Xiaolingtong
subscribers. China Telecom retaliated in kind, forcing the regulator to step
in to mediate. The two mobile operators have also tried slashing connection
fees and offering calling-party-pays services to compete with the rebel
service but have been stopped by the regulator.
Meanwhile, consumers are not complaining. Zhang Xiao Ming, a Baoding
pedicab driver, says he spends only Rmb20 a month on his Xiaolingtong
phone. Compared with his fee of Rmb5 per ride, his Xiaolingtong is more
than paying for itself, he says. "When customers want to get hold of me,
they can get me through the Xiaolingtong," says Mr Zhang.
Copyright: The Financial Times Limited 1995-1998
[How can an article dated in 2001 be copyright 1995-1998 ?] |
