China's fixed-line market will lift its telecom broadband profits

According to Hong Kong media reports, the mainland's three major operators have been fiercely fighting in the mobile network market, introducing different concessions, and even slashing prices, but the fixed-line market has quietly set off a revolution.

A person close to the Ministry of Industry and Information Technology recently revealed that China Mobile’s fixed-line license has basically no suspense, and the legendary Chinese radio and television network company that is about to be established this year will get a fixed-line license after listing. By then, Telecom, Mobile, China Unicom and China Guangdong will stage a "Four Nations War" in the broadband market. While China Telecom’s broadband profits will be unavoidable, China Telecom will find itself in an embarrassing situation.



It is understood that at the end of 2010, the Ministry of Industry and Information Technology had organized researchers to follow up the changes in the telecommunication market environment and the development of operators. It was assessed whether the timing of the change in the license scope of the three telecommunications operators was ripe. In the second half of 2011, the assessment was concluded. The basic tendency is to liberalize restrictions on mobile licenses. However, the Ministry of Industry and Information Technology did not finalize its decision.

The last piece of straw comes from the "Development and Reform Commission's Monopoly Investigation on China Telecom Unicom" at the end of last year. Although the China Mobile and Broadcasting Systems that were questioned as whistleblowers at the time did not recognize it, the consequences of this incident were obviously beneficial to them. “After the Spring Festival, the (Ministry of Industry and Information Technology) Department has already met to clarify the scope of license changes to move.” The person said.

The chairman of China Mobile, Lou Guohua, stated at the shareholders’ meeting in May that it was time to cancel the restrictions on entering the fixed-line market in the past, so that they were granted a full-service license. However, Wang Xiaochu, chairman of China Telecom, the mainland's largest fixed-line operator, said that China Mobile has more than 50% of the mainland's telecommunications market. It is best to maintain the status quo at present, and it is proposed to lay a solid network business, which requires a lot of expenses.

China Mobile has already established a long-term license plate for mobile phones. With fixed broadband, operators can bundle it with fixed lines, mobile phones and other services to increase revenue and retain customers. This is a great tool for market competition. This can explain why China Mobile has been calling for a fixed Broadband access business qualifications. With the backbone network, Internet companies can reduce the huge cost of network leasing and more easily carry out their own business. This explains why Tencent’s self-built backbone communication network was reported some time ago. Moreover, by increasing the development of broadband applications, etc., we can certainly find ways to make broadband construction profitable.

According to Lu Xinjie, the telecommunications planning institute of the Ministry of Industry and Information Technology, if China Mobile eventually gets its wish, it will undoubtedly help China Mobile to enter the fixed broadband market more easily, and may make the mobile communication market more competitive. Furthermore, it hopes to promote the increase in the number of broadband backbone network operators to form a benign mechanism for broadband development, and hopes to open the door for private capital to operate broadband services. In this way, the significance of China Mobile’s application for fixed-line licenses will be even greater. Far-reaching.

Rui Ming Xiong, a Mizuho telecommunications analyst, pointed out that “there will be competition. In the past, telecommunications and China Unicom have been controlling the market. If China Mobile joins, the fixed-line monthly fee may have to be reduced.” The weakness of China Mobile is the lack of access to the network, in other words, it still has to Telecommunications or Unicom negotiated to lease them into the housing network. He estimates that China Mobile will move into densely populated commercial districts or new residential estates, which will save on network fees. As China Mobile’s mobile phone growth has slowed down, new businesses are needed to stimulate earnings growth.

Although the legendary Zhongguang Network Company has not seen the listing, the next-generation network NGB has made rapid progress. In the pilot city of Shanghai, Eastern Cable has basically completed the digital conversion of 2.5 million cable TV subscribers in the downtown area and the construction target of 1 million NGB demonstration networks. According to the plan, Shanghai will continue to expand the scope of NGB transformation this year and will cover the year. 2 million households, by 2015, nearly 6 million users including the suburbs will complete the transformation of NGB. The person close to the Ministry of Industry and Information Technology confirmed that the National Cable Network Company has obtained a fixed network operating license, and "like other telecom operators, it is an integral part of the national broadband strategy."

"Beginning this year, we want Oriental Cable to report to us on broadband prices, including pricing costs and basis, to prevent vicious competition," said the person in charge of the Shanghai Communications Administration. Analysts said that this disguised form clearly clarified the status of the entire cable operator of the Oriental Cable. Originally, it held the same resident network license as Great Wall Broadband and Broadband.

It is intriguing that more than three months have passed since the licensing decision was made, the Ministry of Industry and Information Technology has yet to publish this news. The person broke down the reason: "The Ministry of Industry and Information Technology has made more careful decisions." He said that the move had fixed network. There should be no suspense on the license plate. However, based on the status quo of a mobile giant, the ministry is considering providing some compensation rules for telecommunications and China Unicom. “For example, we have some preliminary strategies for settlement fees, quality of interconnection, and vicious competition in the broadband market. In particular, telecom Unicom and other operators' inter-network settlement fees will definitely drop, but how to reduce it will require more details to be discussed."

According to the results of China Telecom and Unicom, the number of fixed-line subscribers has continued to increase in the past five years. Although the ARPU value has shown a downward trend in recent years, the rate is much lower than that of mobile communications. Among them, China Telecom's broadband ARPU last year was 72.2 yuan, a decline of 6.4% is the highest in three years, while China Unicom also slightly fell 1.2% to 56.4 yuan.

Song Yongjun, chief analyst of De Rui Telecom Consulting Co., Ltd. believes that once it moves into the broadband area, it is most likely to adopt a low-cost dumping strategy. China Mobile’s broadband strategy will directly bring warfare to telecommunication’s core profit area, and China Telecom’s broadband profits will be unavoidable. At the same time, broadband is currently the lifeline of China Telecom, broadband is challenged and the mobile service is still not stable, and China Telecom will find itself in an embarrassing situation.