China Mobile – losing its influence

Happy New Year!! In the beginning of a year, many organizations will give their predictions for the coming year.   I seldom predict the future.  But, I think one thing that is rather certain in 2011: China Mobile is losing its influence .

Many people already know the reason.  It is because it was grant the worst 3G licenses – TD-SCDMA.  The home made standard does not have a hot product, such as Apple iPhone, to promote it.  It is seldom used in the rest of the world.  So, many China mobile users switch to China Unicom, when they want to upgrade to 3G phones.  China Unicom uses the more widespread WCDMA standard. Chinese government is helping them to make the decision. People can switch between operators and keep their original numbers.  Many of my local Chinese friends are doing so.

If we check the MIIT data, we will see, for 2G, China Mobile has 70% of the market.  But for 3G, the three operators, i.e., China Mobile, China Unicom, China Telecom, have more or less the same number of users.  By July 2010, China Mobile had 11.8M 3G users, China Unicom 8.5M and China Telecom 7.75M.

This could be a good news for companies providing mobile services. China Mobile used to be the absolute monarch. It has 70% of the country’s mobile users and 90% of the data business – the part mobile services providers can participate. Now, the playing ground is leveling. There are three operators to choose from. Terms and conditions for partnership could be fairer and more stable.

Of course, the transition will be a long term process. And no one dares to not consider China Mobile’s response in any mobile related development at the moment.

But there are signs showing China Mobile cannot dictate mobile development anymore.  For example, the mobile payment.  China Mobile is the first to launch mobile payment in China, with a proprietary 2.4G Hz technology.  But, the other players in the industry, such as China Unicom, China Unionpay, the Chinese banks, prefer the 13.56M Hz worldwide standard.  Recently, China Mobile has softened its position. It will keep using 2.4G Hz for the existing cities that it has launched the services, e.g. Shanghai.   But for the other cities, it will also adopt the 13.56M Hz standard.