It's not wise for telecom operators to sell 3G only to the elite who are extremely small groups of the billion populations.
[+] The first stage of 3G in China
The previous articles by me are not to look down upon 3G value added services or to support the voice service. Instead, I am trying to point out that telecom operators are industrial leaders, what kind of strategies they will take on 3G decides in what kind of strategic thinking value added services will be placed.
An SP (Value Added Service Provider) probably can live on 3G with only millions of value added service users. However, for a telecom operator, it is far from enough if the number of subscribers attracted from value added services (which are the primary selling points of 3G) is just the same. The two points of view are different.
However, it is the general atmosphere to hold high expectations on value added services in China's 3G market. Including telecom operators, there is a stir of emotions in related industries including SP, CP (Content Provider), and even the Internet industry.
The common opinion is, in such a big market, not only can we define system standards, but telecom operators are also able to define mobile phone specifications. According to the successful 3G development experience in Japan and Korea, customized mobile phones can increase telecom operators' revenue by optimizing the user experience with value added services.
Therefore, at the first stage of China's 3G market, we will see a lot of TV ads promoting value added services, telling you that you can watch movies, listen to music, play games and access the Internet anytime anywhere via 3G.
With TV commercials, you will see the elite image of a middle-aged man in a nice suit that has a successful career holding a 3G phone; the cool image of young people watching movies or listening to music on 3G phones; or the touching image of family members seeing each other from the video phone.
[+] The second stage: use the voice service as the bait
The four telecom operators who will have obtained 3G licenses will boost value added services to a considerable height. As previously stated, operators who obtain WCDMA and CDMA licenses are based on the best interests of their own. While the operators with the TD-SCDMA license do so just because they do not want to believe their doomed fate.
With multi-functional and high-price mobile phones (probably the customized mobile phones provided by telecom operators), low-price data service rate plan (the voice service rate remains the same with 2G) and the TV ads promotion, 3G service will immediately attract a group of customers through its eye-catching value added services.
These users are just like the characters in the TV ads - business people and young white-collars. However, the number of that user group is limited and increases slowly. When the stacked mobile phones and value added services can't win more 3G subscribers, the loss from the price reduction of handset together with the telecom equipment amortization charges will drive operators mad.
Shortly after, the price war of voice service rates plans and mobile phones will start. The reality will stop us from dreaming. Do not forget that there are hundreds of millions of mobile phone users in China. Most of them are not elite or young white-collars. They don't want to understand 3G. What they want are immediate benefits.
But have 3G value added services been sentenced to death? No! The fact is that those 3G users attracted by the low voice service calling rates use value added services a lot! I conclude the 3G telecom operators' actual operating experience in the past four years as below:
- It's much faster to attract 3G users by offering low voice service rates plans than promoting value added services.
- To make up for the revenue loss from the voice service, operators have to highly invest on value added services.
- Even those 3G users attracted by low voice service rate plans will use value added services a lot.
- The premise is that user experience with value added services must be made good. Some degree of handset customization is inevitable.
[+] The outlook of China's 3G market
China's 3G market will show several features:
1) The 3G mobile phones with simple functions. Fully functional 3G phones may mean higher prices, especially for the TD-SCDMA system. To be simplest, a mobile phone that can make phone calls and support WAP is enough. Other functions such as camera, video, etc. can be left out at the initial stage.
2) Promote packages of low-price mobile phones and cheaper voice service rates plans (of course, WAP service rate is the key point as well), leading to a situation of rapid sales at cheap prices. It was difficult to do so several years ago, because the cost of 3G phones was still high and price reduction meant that telecom operators had to pay a lot of subsidy.
But when China's 3G market starts, the cost of WCDMA and CDMA 3G phones will be largely reduced. Bulk purchases by telecom operators will make the price even lower. With the help of smuggled mobile phones in this market, it is not difficult to buy cheap WCDMA and CDMA 3G phones.
3) Rapid sales at low prices means that 3G users will quickly turn to low-end customers, who are different from the elite or young white-collars in our imagination. Users of 3G value added services at this stage will be workers in big cities in addition to residents (primarily students) in second-tier cities.
Those people's standard of living is relatively low, so they can not afford high-end entertainment. They spend a lot of time in Internet cafes because that is the entertainment they can afford. Those who don't go to Internet cafes will use mobile phone WAP. They are willing to pay for value added services because a single mobile phone can meet their demands for communication and entertainment at the same time.
They are the primary users of 3G value added services, even though they adopt 3G services just because of the cheaper voice service rate plan! This is the outlook of China's 3G market in my expectation. It is not wise for telecom operators to sell 3G only to the elite who are extremely small groups of the billion populations.
2007/04/15 - By Digitalwall.com - Way to
China Internet/Telecom )
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Prev : The Mist of 3G in China (2) TD-SCDMA is a Hot Potato
Next : The Mist of 3G in China (4) The Way to Survival for SP
- Today in History
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Predictions on China Internet Market (7) Web 2.0 Economy - 2006/04/16
How to Sell an Apple: A Classic Case of High-tech Marketing - 2005/04/10
3G Time Comes (5) Content - Killer App of Video Phone - 2003/04/13
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