The Chinese operators’ ability to make early 5G profitable looks uncertain, given the speed and scale of their roll-out, combined with increased price competition and little sign that consumers will pay a 5G premium. Just to make matters more challenging for the three established MNOs, they now have to deal with mobile number portability (MNP), which after any delays, came into force on December 1.
After years of discussions, tests and false starts, the three operators haves been running MNP pilots in five provinces since September, and have seen 3.16m users choosing to change to a new operator. This only amounts to 1.8% of the customer base in those regions, but that could still suggest that 20m people might move to a new MNO between now and Chinese New Year in late January, now that MNP is national.
The trials threw up some problems, such as users who found their contracts were for periods of up to 100 years, or who were hit with high fees for changing operator.
This led Lu Chuncong, a senior official from the Ministry of Industry and Information Technology (MIIT), to criticize the operators for “setting up system obstacles, violating the number porting regulations and affecting user experience and perceptions”. However, he said that the operators had invested around CNY30bn ($427m) in establishing nationwide MNP capability over the past eight months.
The move to MNP is something that provided temporary upheaval for operators in many countries long ago, but it is new to China, and the operators are threatened with significant shifts in market share across the 1.6bn-strong base of subscribers.
China has been trying to get the porting technology and process right since 2010, when MNP was first proposed. In the provincial trials, which were completed in September, China Telecom was the biggest winner (gaining 506,000 subscribers), and China Mobile the biggest loser, with a loss of 535,000. In the first half of the year, MNP helped drive monthly subscriber growth for China Telecom and China Unicom of more than 20%, but that figure is now down to just 4% as subscriber preferences stabilize.
China Unicom has launched several offers to tempt defectors, from RMB199 ($28) a month for 40GB and 1,000 voice minutes, to RMB39 for a deal that is zero-rated for services from Tencent, a Unicom shareholder and owner of social media site WeChat. This is just one example of how that novel co-investment scheme will work – several industrial and web giants have taken stakes in Unicom to improve its ability to deploy 5G competitively, and in return they get an influence over how it deploys its network and its services.
China Mobile, the market leader and most vulnerable to defection, has hit back with offers of free data for loyal users, who get more, the longer they have been subscribers to Mobile. After one week, 100m had signed up for the promotion, China Mobile said.
The government has imposed rules that will limit porting – users cannot leave during a contract period, and MVNO customers and those with a family package or broadband bundle are not eligible.