Foreign operators abandon purchase subsidy policy: Reshape mobile communication ecology

The purchase subsidy model is gradually being abandoned by operators. In the United States, mobile operators are quickly letting users give up their subsidised handsets, and in turn attract users to buy their phones at full price through installment plans. In South Korea, SK Telecom, South Korea Telecom and LG U+, the three largest mobile operators, have agreed to build "circuit breakers" in their systems to prevent operators from violating regulatory restrictions to provide cell phone subsidies. Japanese operators, in 2008, began collectively to abolish terminal subsidies.

The operator cancels the terminal subsidy policy, on the one hand because the expensive smartphone cost subsidy already becomes its heavy financial burden; On the other hand, with the rapid development of mobile Internet, it is the general trend to attract users through innovative tariff patterns. Continuous in-depth development of the telecommunications market, new products continue to emerge, the value of the industry chain from the hardware products to the service transfer, the diversification of end product selection and business service innovation, is conducive to operator revenue and the healthy development of the operating market, the original "Malformed" mobile communication ecological environment is clearly a good start.

Operators slash phone subsidy

At home and abroad, operators of mobile phone terminal subsidy is the feeling of love and hate intertwined. Terminal subsidy as the main means to promote the terminal sales of operators, but the terminal subsidy method of selling mobile phones has left a lot of problems. The study showed that over the 2008-2013-year period, Internet connectivity grew at an average annual rate of 10.9% per cent, compared with 4.2% in the same time.

As a result, many foreign operators in recent years have introduced new rules, the intention of the end of the subsidy policy changes. Last March, T announced the abolition of the mobile phone subsidy policy, the three major U.S. operators have announced a similar mobile phone "old for the new" plan, there is no terminal subsidy, instead of buying the whole family purchase method. In South Korea, the telecommunications Regulatory Agency's communications Committee (KCC) has tightened the level of mobile-phone subsidies provided by operators and has repeatedly imposed sales bans or fines on irregularities. In Europe, nearly 30 operators have canceled some or all of their users ' subsidies and turned to leasing or financing schemes.

Compared with the foreign counterparts, the three major domestic operators to change the end of the subsidy is not so obvious determination. Data show that China Mobile's 2013-year mobile subsidy is 26.3 billion yuan, up 11% from 2012. 2014 will increase the strength of mobile phone subsidies, planning mobile phone subsidies 34 billion. Yimin, general manager of China Unicom, said recently that China Unicom's subsidy to the 4G terminal and 3G terminals will not be too different, basically flat, the maximum subsidy amount is about 40%. According to China Unicom's 2013 earnings, China Unicom last year total terminal subsidy of 7.8 billion yuan.

Profit pressure forcing operators to change tactics

In the early stage of low permeability and high price of intelligent machine, "mobile terminal subsidy" has a positive effect on operators. This can not only have a significant marketing effect, but also to improve the penetration rate of mobile phone terminal. There is even a saying that since the iphone came to market, Apple's "strong" attitude towards operators has made "mobile subsidy" an industry standard. However, although the sale of terminal subsidy for operators to bring considerable performance and user growth, but the huge amount of terminal subsidy pressure also makes operators miserable.

In foreign countries, At&t's operating data showed that the company's users increased by 780,000 in the fourth quarter of 2012, but suffered a loss of $3.86 billion as a result of excessive iphone subsidies. Earlier, the profits of At&t and Verizon were once the same as the iphone's sales volume, and some people used "sell more, lose more" to describe the plight of U.S. operators in the terminal subsidy. Not only that, the 2012 annual four-year earnings of Sprint, the US's third-largest telecoms operator, showed a four-quarter loss of as much as $1.32 billion trillion, which was flat in 2011.

At home, the three operators ' first-quarter earnings were not optimistic. Earnings showed China moved a quarterly net profit of 25.2 billion yuan, down 9.4% year-on-year. In addition to the threat of OTT application, huge mobile phone terminal subsidy is also the reason for the decline of operators ' profits.

For operators, mobile subsidies are the single largest cost of a user's contract--68% of the revenue generated by the 24-month contract. 0-Point Research Consulting Group senior Analysis Shizeng said that operators to implement terminal subsidies for a long time, the original intention is to attract users, in order to increase ARPU value and improve user stickiness. However, with the increasing popularity of smartphones and the rationality of users ' purchase to the terminal, the ARPU value is reduced, and the effectiveness of the terminal subsidy policy is decreased.

or reshape the mobile ecosystem

Will the elimination of mobile phone terminal subsidy become the only way for communications industry? From the current foreign operators focus on meticulous management of terminal subsidies, the abolition of terminal subsidy policy in the year, the operator's profit situation is slowly changing.

The company's second-largest mobile operator, At&t, reported that its non-subsidised handsets accounted for 15% of its total sales in the 2013 fiscal year quarter. John Hodulik, analyst at UBS Group, reckons the John Khodurik is expected to rise to 35% this year. In addition, the overall situation of the t has improved, with a net increase of 4.8 million users in 2013 and a total of 45 million users.

For the terminal manufacturers, on the one hand, the strong mobile phone terminals from the previous operators to obtain a large number of profits from the era will be gone, and weak manufacturers or the rising and comer have more opportunities for development; On the other hand, the handset terminal subsidy is also very unfavorable to the development of the manufacturer itself, The excessive reliance on operator terminal subsidy causes its product channel to be unitary, the phenomenon of quantity income imbalance has already been embodied in the terminal manufacturer. In view of this, the phasing out of terminal subsidy is also extremely advantageous to the terminal manufacturer.

Is the so-called soldiers to seek, the next cut, the next cut, its next siege. As the operator through the active development of the relevant terminal strategy system, comply with industry trends and customer needs, and gradually eliminate the high terminal subsidy, through innovative tariff patterns and other measures to attract users, to improve the industry chain of the enterprise revenue and the healthy development of communications industry, new mobile communication ecology or will be formed.