Telecom business, a competition of an integrated industry chain value

A great change has taken place in the character and role of the mobile phone business. The mobile phone is no longer a mere tool for communication but a web-terminal for gradually providing people with pleasure and merriment of a mobile life as explained Ye Fengping, general manager of mobile communication department of China Unicom. This has led to an integrated competition of the industry chain value from a simple competition among telecom business operators only while the harmonization and connection of the whole industry chain value is also a necessary requirement of the differentiation of the market.

He said the grass-root telecom operator is the core of the industry chain value and should take up their duty-bound responsibilities. The competence of the telecom operators in building up the industry chain has a direct and decisive effect on the competitive strength of the whole industry chain value in the market in future. And in this aspect, the profit-sharing model plays a key role in the success or failure of the industry chain value while a good mechanism of communication is the core factor for deciding whether the industry chain value can enjoy a sufficient competitiveness.

Will mobile phone manufacturers drop out from the chain?

Whether at the initial releasing period of the CDMA or when its users have surpassed 3 million until now the most bothering problem for China Unicom lies in the short of supply of CDMA phone-sets. As revealed, China Unicom has to fulfill a market goal of 7 million users in the market by the yearend in which the shortage of mobile phone-sets come up to 2 million in all.

The manufacturers of the CDMA phone-sets have shown great support to the energetic promotion by China Unicom and hoped that by resorting to these measures, a sales amount can be gained better than what it was before. However, there are still a number of manufacturers adopting a sitting-on-the-fence attitude. For the moment, except the Samsung who've signed an agreement with China Telecom for providing some 700,000 CDMA 1X phone-sets and the TCL under negotiation for cooperation, there sees no practical move from other manufacturers. In view of the output of 2.7 million CDMA phone-sets brought out in the first half of this year, many manufacturers, though won't take a give-up attitude, take a circumspect one instead in making their efforts.

Open up platform: creating an atmosphere for new business development

In the course when the mobile communication is developing from 2G to 2.5G and 3G, mobile phone equipment manufacturers and phone-sets manufacturers have already begun to pay more attention to the development of new business fields, providing developers with platform, terminal and testing and monitoring service, etc. Ericsson, Nokia, Siemens and Motorola, all these communication equipment and terminal manufacturers and suppliers have made great exertion on this aspect. Even Huawei who's not engaged in producing mobile phone-sets has recently set up an open lab for CDMA 1X, making test on the compatibility of different types of phone-sets with the system equipment.

Obviously, the manufacturers are making efforts for a better adaptation and support of the phone-sets they turned out to the new mobile businesses. And they wish to bring out the first thing their products in line with the improved and designed requirement the moment when the new businesses call for so as to gain superiority in the market.

Contents service: to make added value in future

This year has witnessed a fact in which the short-news service has helped several big portal websites to have their revenue increased. In the past, the SP (a content supplier) had always been kept under the shade of the telecom operators, but now the SP have also set a foot in profit-sharing by offering short-news service, such as Sina and Sohu and some others who are by and by becoming more independent. And by way of providing service of individuality, they are standing out a key force in the promotion of the industry chain as a whole. Due to the establishment of the profit-sharing model it has offered operators, the SP and the end-users to initially form a complete industry chain for mobile phone added-value service.

In the meanwhile, the operators also come to know that it's by no means enough for them only to work out the rules and regulations for the games and technological criteria, they have to make sure that there's something to get in at every node of industry chain in order to bring out an industry chain, at every node of which there's profit to make.

For China Unicom, the CDMA 1X network is only a pioneering step forward. However, the mere competition between the two operators, China Telecom and China Mobile in the past has already turned into a chain value competition with the two companies at the core of it. Nevertheless, the real benefit receiver should be the consumer.

( October 10, 2002)