The Rise of the Countryside: An Analysis of the Restructured China Telecom Market
In the latest research report, Ovum, a market research company, analyzed China Telecom's strategic goal-to promote the growth of mobile business. This article analyzes the strategic steps of its action department, and analyzes the strategies, advantages and disadvantages of China Mobile, China Unicom, and China Telecom in this new market in view of the hidden business opportunities in rural China.
Before the reorganization of China's telecommunications market, China Telecom's development prospects seemed bleak. Its fixed-line online business has reached saturation, coupled with the rise of mobile fixed-line integration services (FMS) and the loss of PHS customers, the company's number of users has rapidly decreased.
In 2008, China Telecom lost 11.2 million PHS users. In the next two years, as China will stop PHS services, it is estimated that China Telecom will lose another 42 million PHS users. In addition, in the past two years, the company's home fixed line has gradually decreased. In 2006, the company's home fixed line users reached a peak, reaching 122 million, but in the first quarter of 2009, it decreased to 115 million.
Although the number of broadband users is still steadily increasing, this growth has slowed significantly, showing that the broadband market is also approaching maturity. In order to maintain the growth of broadband services, China Telecom has made a lot of efforts in developing broadband content services (such as IPTV). However, the obstacles to the integration of broadcasting and telecommunications have brought great challenges to this company.
Another basic factor leading to the decline in the number of China Telecom ’s fixed-line connections is that it is difficult for the company to win rural users. Despite the scale and experience of China Telecom in the fixed-line market, fixed-line services are still quite expensive for the rural market, especially compared to mobile services. In terms of cost and speed of service, its fixed-line services are also not costly. benefit.
Looking ahead, most of China Telecom ’s growth will come from new operations. In particular, the company is focusing its efforts on urban areas. This is the correct strategy, because China's customers with medium to high consumption capacity are concentrated in urban areas, and China Telecom also hopes to promote new 3G services in these areas.
However, compared with competitors, China Telecom still lacks experience in the mobile business field, and currently only accounts for 5% of the entire Chinese mobile market. Another challenge is that mobile users in urban areas have become saturated. Since China Telecom ’s strategy is to target urban users, China Telecom must seek to acquire existing mobile users from China Mobile and China Unicom, or stimulate users to purchase multiple mobile operators through various solutions service. No matter what method is adopted, it seems very difficult.
The lack of portability of mobile numbers is another obstacle to be overcome. In addition, China Telecom's target is mid-range and high-end mobile users. These customers are very valuable, and competitors will not easily lose these customers.
Even though China Telecom is making good progress in urban areas, it is still unlikely to reach the target of 100 million mobile users in 2011. Therefore, we speculate that China Telecom ’s 2010 and 2011 action strategies may prioritize the rural market. However, China Mobile has a great advantage in the Chinese rural market, which means that for China Telecom, even if it is to win new users in rural areas, it will also face a tough battle.
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