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To charge, or not to charge Weixin users

By Xiao Lixin | China Daily | Updated: 2013-04-19 07:13

Tencent's over-the-top (OTT) content service WeChat (or Weixin in Chinese), free and most popular mobile application in China, seems to be in trouble. Rumors have it that China's monopolistic telecom service providers are working out a plan to impose charges on the use of Weixin, with the Ministry of Industry and Information Technology saying "it is possible that telecom operators will be allowed to impose fees on WeChat for signaling channel usage".

The telecom service providers say Tencent should pay for taking up bandwidth and generating excessive data flows for the applications it has developed and operates, which sometimes cause traffic jams on the Internet highway.

Given the huge number of Weixin users (about 300 million), complaints against the three State-owned telecom giants have been rising not least because of their poor service and hidden charges. The common streak of the complaints is: Since customers have already paid telecom operators for the data volume needed to chat (through text or voice), why should they be charged a second time if telecom service providers are eventually allowed to collect fees on the use of Weixin?

Although some insiders and telecom operators seemingly tried to divert public attention by saying Tencent rather than ordinary Weixin users should pay the charges, the crux of the argument is not about who will be charged, but whether the charge is justified in the place. As more Chinese switch to smartphones, the emergence of OTT applications has somehow outstripped the services provided by the telecom companies, carving up revenues generated by their core business such as text message and phone services. Obviously, when Weixin, a cheaper but more efficient communication tool, hit the market, ordinary customers gradually dumped the traditional text messaging service for the new one.

MIIT figures show that, because of free OTT applications such as Weixin the volume of text messages sent by mobile phone users in January and February 2013, when text messages usually explode thanks to Spring Festival, fell by up to 10.6 percent year-on-year. And a recent Data Center of China Internet survey shows text messaging and phone services, the two mainstays of the three telecom giants, dropped by 20 percent and 5 percent in 2012. Not surprisingly, the easy solution for telecom carriers, especially China Mobile whose traditional business has been challenged the most is to impose charges on Tencent to cover their losses.

But telecom service providers in other countries did not impose fresh charges on OTT service providers that developed popular communication applications similar to Weixin, such as Kakao Talk in the Republic of Korea, Line in Japan and WhatsApp in the US.

Take Kakao Talk, for instance. Even though the daily volume of text messages sent via Kakao is three times of those sent through ROK telecom companies, neither Kakao nor the telecom companies imposed any charge on the users. A Japanese telecom operator has even found a "permanent" solution to the problem by launching a monthly package with no limit on data volume.

It is thus the responsibility of the three State-owned telecom companies and Tencent to find a solution that would benefit all sides.

Indeed, hundreds of millions of Weixin app users have increased the load on Web services. But technically speaking, the problem of signaling is not unsolvable if the current 2G/3G bandwidth capacity is as good as the claims made in telecom companies' advertisements.

Tokyo, Seoul and Hong Kong, all densely populated cities with extremely high ratios of smartphone use, have become wireless cities in the true sense of the term by expanding the 3G/4G network that supports the heavy use of smartphones and online applications. There is a lesson here for the three State-owned telecom giants: The construction of 3G/4G network in cities on the Chinese mainland could solve the problems of troubled signaling and slow network speed.

Besides, Tencent should also start 2G/2.5G network optimization programs to ease the load that the heavy use of Weixin generates on the telecom operators' telecom networks.

To a certain extent, what apps like Weixin offer is no longer pure communication service, but a new lifestyle in the mobile Internet age. A fact the three telecom giants have to accept and deal with is that a handful of IT companies like Tencent have striven to survive and develop on innovation, trying to meet users' need for more free mobile Internet services and to make information sharing easy.

Therefore, the three giants' attempt to rely on monopoly and snuff out any "threat" to their monopoly are doomed to fail. Only by catering to the need of the times, expediting reform and offering innovative services to users (by expanding the 3G/4G network and/or upgrading their old OTT products such as China Mobile's Fetion) can the three telecom giants regain their competitive edge in the market.

(China Daily 04/19/2013 page9)

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