Why China Telecom is so radical this year

In the 3G year, the Chinese telecom market was full of smoke.
However, unlike in previous years, China Unicom did not take the initiative to provoke war ends this year, but instead took the initiative to sleep and accumulate strength. Even if the 3G Package was launched, it also focused on market segments rather than comprehensive attacks. China Telecom has the opposite performance. Although China Telecom monopolized the fixed-line telephone and broadband market with almost no competition, it has also been a glimpse of the "cake" in the mobile communication market for a long time. Therefore, after China Unicom purchased the cnetwork, on the one hand, China Telecom expanded the network at an extraordinary speed, and on the other hand, it launched another round of attacks on China Mobile in the market, which is extremely radical.

In the face of the aggressive competition of China Telecom, mobile companies in some places are not only messing up their own pace of advancement, but also bring a certain negative impact to the company's image.
 
This is a manifestation of unconfidence. In fact, mobile do not have.

2. Why is China Telecom so radical?

The reason is very simple. The reason behind the radical nature of China Telecom is not because of its own strength, but because of its inner weakness:

1. It is difficult for China Telecom to break through the minimum economic scale. 

The telecommunications industry is an industry with significant economies of scale. If it fails to reach the minimum economic scale, it can only continue to lose money.
 
In the past few years, the domestic telecom market has been restructured several times, with several small operators emerging in the middle. However, without exception, almost all these small operators end with a serious loss, and no one can make a profit. Although there are management reasons, the most important reason is that it cannot break through the minimum economic scale.
 
The smallest economic scale is closely related to the tariff level. The lower the tariff, the larger the minimum economic scale required.
 
Over the past decade, due to fierce competition between China Mobile and China Unicom, the tariff level of mobile communication has declined year by year, gradually increasing the minimum economic scale required for CEN profit.
 
China Unicom's cnetwork is unable to make profits at the peak of its users, and China Telecom has shrunk a lot since it obtained the cnetwork, making it more profitable. Therefore, to make China Telecom's mobile business a new growth point, it must rapidly expand the size of the cnetwork, which is the biggest motivation for China Telecom to be radical this year.
 
Another reason why China Telecom is radical is its weak industry chain.
 
The competition in the telecom industry is not only between operators, but also between industrial chains. Due to Qualcomm's monopoly on CDMA patents, the CDMA industry chain has been weak and cannot be compared with GSM and WCDMA.

The richness of terminals is an important factor that affects user selection, while the weak industry chain causes CDMA Terminal problems to be quite obvious. To make a visible "cake" for terminal manufacturers who "don't see rabbits," China Telecom had to implement large-scale terminal subsidies and had to create a "high-speed growth of CDMA users" situation. The actual results and benefits can only be put aside for the moment.

2. Missed the best time

If CDMA was originally intended for China Telecom rather than China Unicom, and China Telecom was not split between the North and the South. If the restructuring of China Telecom was not delayed, China Telecom would not be so passive today, today's mobile market is useless.

Unfortunately, there are not so many "assumptions" in this world ". These "if" are just as meaningless as "If mobile receives a WCDMA License.

In the past few years, it was the fastest growing mobile phone users and the most popular penetration rate. However, telecom restructuring and 3G licensing are dragging on, leaving China Mobile with a rare period of strategic opportunities. In those years, new users in cities and counties were basically harvested by China Mobile and China Unicom, and the market was basically saturated. There were very few new users. As early as a few years ago, mobile began to deploy the rural areas, and most of the real additions in the past two years came from villages and towns.

Currently, China Telecom cannot compete with China Mobile and China Unicom in the rural market, regardless of the network or channel. to expand the size of the cnetwork, China Telecom can only compete for the city's inventory market. However, it must be extremely difficult.

3. Paradox of competition in the telecom market

There are two main ways for electricity to compete for inventory information: one by one, and the other by another ".
 
"Snatching" mainly relies on the advantages of broadband and fixed network bundling, as well as the many years of operation in the group's customer field. In the months at the beginning of the year, China Telecom took advantage of these advantages to counter many group customers at no cost. However, this kind of countermeasure often only drives the growth of the number of users, but does not bring real benefits, and this kind of growth will soon hit the ceiling, lack of sustainability.
 
"Transfer" mainly relies on forwarding to the Internet to send mobile phones, carrying numbers to the Internet, and so on to attract PHS users to migrate to Tianyi. In recent months, PHS traffic has declined significantly, and c's traffic has increased significantly, which means that the recent c's increment is likely to come from PHS's network-to-network. China Telecom's one-way practice has been achieved in the near future, but it has attracted the attention of its competitors. I am afraid it is actually protecting my PHS network-switching operations.
 
Although China Telecom declared that it would not engage in a price war, in the competition for the stock market, China Telecom has neither a network nor a service advantage. What does it rely on to compete with China Mobile and China Unicom? Whether it is "grab" or "transfer", China Telecom's means can only be price wars or cost wars.

As China Mobile strives for cost, China Telecom has no chance of winning, just like Tyson's strength and wealth.
 
However, if we compete with China Mobile, this will inevitably lead to a decline in the mobile tariff level, which will inevitably increase the minimum economic scale of China Telecom's cnetwork and reduce the benefits that cnetwork can bring to China Telecom.
 
This is the paradox facing the development of China Telecom's cnetwork, which is extremely difficult to crack.

4. the main business of China Telecom is continuously losing blood

For China Telecom, mobile business accounts for only a small portion, and the main revenue is from fixed-line telephone and broadband. With both of them as the basis, China Telecom can develop the cnetwork by "burning money" for a period of time.

However, just as the elderly cannot raise their children forever, China Telecom's fixed-line network is already dying, and PHS users are shrinking rapidly, and the growth of broadband has reached a bottleneck, how long can we "raise" the wings of the main business that keeps losing blood?
In the short term, China Telecom can compete with the "bad" mobile market, but China Mobile and China Unicom are not at a risk. Although TD wireless landline and tietong broadband are not enough to pose a serious threat to China Telecom, they can definitely speed up the "blood loss" Process of China Telecom's main business.

In the broadband field, with the bandwidth egress and IDC resources of North China Netcom, Unicom's broadband has already posed a considerable threat to China Telecom.

Basically, this year, China Mobile started to make great efforts in cable broadband. It may have been two years since China Mobile actually threatened China Telecom. This is probably the biggest mistake of China Mobile in the past few years. However, when the mobile broadband and IDC layout, coupled with the last 100 m through the TD-LTE to crack the monopoly, then the monopoly of Telecom broadband will inevitably be broken.

5. The first-mover advantage of CDMA is about to stop

Among the three 3G standards, China Telecom CDMA is in a very embarrassing position. If it is more advanced than technology maturity and industry chain, it is not the case of China Unicom WCDMA. Instead, it is the case that China's mobile TD prevails over China's support and upgrade of 4G.
 
The only advantage of China Telecom CDMA is: the fastest upgrade, because only software upgrade is required; the original MHz band is idle, so you don't have to worry about indoor coverage in the short term. Therefore, in the face of Mobile 2G stick to and China Unicom's WCDMA attack, China Telecom must use the time difference that China Unicom's WCDMA network has not yet been built to rapidly develop its users.
 
At present, China Unicom's WCDMA network has been basically built. Although it still needs to be optimized, it can now officially "Participate ".

At the beginning of the year, China Telecom vigorously developed network adapters without any consequence, resulting in the rapid consumption of its bandwidth. China Unicom has been developing network adapters with great caution. It is expected that the bandwidth advantage of WCDMA will be further highlighted, and the reputation of CDMA will gradually deteriorate.
 
China Telecom may want to continue its bandwidth advantage through EV-DO rev. B, but this requires a lot of investment and terminal support. In addition, in terms of frequency, I am afraid that China Telecom will have to enable the 3G frequency band, thus encountering indoor coverage problems.

Iii. How to Deal with it 

Being calm and unforced is often a portrayal of the strong, and being impatient is just a manifestation of the weak.

China Telecom is far more radical than China Telecom. At present, China Telecom's current situation can be described as the former tiger and the latter Wolf, in the middle, suffering from enemies.

In fact, China Telecom's radical strategy is to fight for the survival of the future. It is a last resort and a helpless choice that knows that there will be future troubles.
 
Although on the surface, China Telecom's Tianyi development is fast, in fact, it is the operator with the most slow growth in the overall traffic, and its profits have declined sharply, making the situation not optimistic.

Currently, China Unicom has made great efforts in WCDMA, and China Telecom will face off-the-net peak. It is expected that the scale of China Unicom's net user base will not exceed that of China Telecom sooner or later, and may be greatly reversed in October.
 
We must understand that China's telecom market does have its own particularity. The State hopes that effective competition can be used between carriers to provide better services to the public, so that the competition will not be ineffective due to the monopoly of any operator, at the same time, the country does not want the loss or devaluation of state-owned assets due to excessive competition.

Therefore, in the face of China Telecom's offensive, mobile employees should adjust their mentality.

In the face of China Telecom's attack, mobile naturally cannot take the initiative to retreat, but it cannot use radical and inappropriate measures to cope with it. Excessive behavior is often the harm to the entire telecom industry, and eventually the deepest harm to yourself.

I hope that, in the face of the Telecom attack, more mobile employees will be able to embrace an understanding and tolerance, and be able to respond rationally and calmly. I hope that mobile will actively defend at the same time, we can devote more efforts to breaking the monopoly of broadband and fixed-line communication, guiding 3G application innovation models, and building a benign competition order with the mind of an industry leader, this allows users, countries, and operators to achieve harmonious and unified interests, so that the entire telecom industry can embark on a sustainable development path.

Original article: http://labs.chinamobile.com/mblog/59442_30187