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April 1, 2010

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Home » Business » IT

Companies wage intense battle for a share of wireless Internet market

By Ding Yining | April 1, 2010, Thursday | Print Edition

IT takes Sherry Yao more than two hours to commute by shuttle bus from her home to her job at Shanghai Volkswagen in the Anting industrial zone in northwestern Shanghai.

It's not down time to her. Yao doesn't let those hours go wasted.

"I check the latest sports news on Websites and chat with friends on MSN messenger on my phone," said the 25-year-old sourcing engineer.

Yao and millions like her are the target of telecommunications operators, content providers and traditional Internet companies. All are vying to grab their share of the fast growing wireless Internet market as more and more people rely on their mobile phones to stay connected with friends, family and the latest news.

Net users who go online via their handsets in China nearly doubled last year to 233 million, accounting for 60 percent of the nation's net user base, according to China Internet Network Information Center. Among them, about 10 million are 3G mobile phone owners.

At the same time, annual growth rate for fixed board band users fell 29 percent from 42 percent in 2008.

"3G users account for a very small part of wireless Internet users, and that's the area where we expect to see significant growth in the coming years as telecommunications providers increase their marketing efforts," said Chi Dazhi, a researcher at the China Internet Network Information Center.

"Wireless Internet will develop closer connections with traditional industries as business owners begin to seize a golden, wireless opportunity to promote their products," Chi added.

Tencent has long occupied the top spot in terms of instant messaging services, partly because the penguin logo on its QQ program appeals strongly to millions of youngsters. In early March, the number of simultaneous online users of QQ reached 100 million.

Now the company is making efforts to convert more than 500 million active registered users of QQ, its instant messaging service, into users who pay public utility bills and even book flights via their mobile phones. In the online payment sector, Tencent has only a 20 percent market share, compared with rival Alipay's more than 50 percent.

"In early April, we hope to launch the mobile version of flight bookings and payment of public utilities bills, which will enhance our existing services of paying telecommunications bills and buying movie tickets," said Du Hong, director of the wireless Internet division of Tencent.

Tencent's mobile platform also supports payment for value-added services related to its social network services and online chatting tools.

"We're still at a starting point, and customer demand will skyrocket in the next three years," Du said. "Our biggest advantage is user loyalty to our social network and online chatting tools."

He added that Tencent also will serve as a platform for merchandisers to promote goods and services, utilizing the specific location of a mobile phone user. For example, users may want to check out traffic conditions or find a nearby restaurant via their mobile phones.

"The number of wireless Internet users may not see a huge increase this year, but existing users will stick to their familiar services and spend a longer time on them," said Fang Li, researcher at Analysys International.

"Merger and acquisition deals are likely in the wireless sector this year as service providers seek to increase their competitiveness to keep customers," she added.

Fang credits the launch of 3G services in China for the boom in wireless users. 3G has made everything faster and more convenient.

The State Council, China's Cabinet, gave the go-ahead for the launch of commercial third-generation wireless services at the close of 2008. Official licenses were awarded to China's three biggest telecommunications operators: China Mobile, China Telecom and China Unicom.

The operators lost little time in marketing the state-of-the-art services.

China Mobile, the world's largest telecommunications operator with more than 470 million users, is developing video-on-demand services for its mobile phones, in partnership with China Central Television and Shanghai Media Group, the city's TV and radio broadcaster.

"We hope to become the biggest distributor of wireless video content," said Li Hui, head of the business development at China Mobile's video operation center.

"We'll push for wider acceptance of 3G services to mobile users, and at the same time, we hope to attract more content providers because network carriers like us don't have the resources to provide all the content that is needed," Li added. "We will succeed only by cooperating with other content providers."

He said China Mobile is also discussing tie-ups with corporate clients and exhibition organizers to provide tailored mobile video services.

Li declined to disclose how the company will share income with content providers. Under the new service, users will be able to watch live and repeat TV news program via their mobiles by paying a fee of 6 yuan (0.9 US cents) a month.

Except for such "package" fees, users will be exempt from Internet connection fees whenever they use their mobile to watch TV programs. "We aren't focusing on connection fees, but rather we hope to attract users and increase our income from value-added services," Li said.

Yao and many other users are waiting to see how it all pans out.

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