The Chinese operators have many advantages over their counterparts elsewhere, including free spectrum and significant government and vendor support for their R&D and trials. However, they also have many challenges. In particular, they are caught between having their technologies and deployment timescales dictated by the government – sometimes without a firm basis in commercial potential – and having to turn a profit like any other MNO.
The introduction of a new 5G entrant, China Broadcasting Network; the plan for China Unicom and China Telecom to share active networks; the aggressive timeframe for 5G; the permission for MVNOs – all these have restructured the market and provided profitability challenges for one or all of the operators. The latest change is the introduction of mandatory nationwide mobile number portability (MNP) by November 30.
This is something that provided temporary upheaval for operators in many countries long ago, but it is new to China, and the operators are gearing up for the change as they are threatened with significant shifts in market share across the 1.6bn-strong base of subscribers (only 10m pre-registered for 5G, so a 5G focus to retain or increase market share will not be enough by itself).
China has been trying to get the porting technology and process right since 2010, when MNP was first proposed, and provincial trials were completed last month. This saw more than 2.3m users switching to a different provider, with China Telecom 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.