When the heat is on

China Daily (Canada) - - CHINA - By LIN JING

lin­jingcd@chi­nadaily.com.cn

China Mobi l e , de­mand­ing that main­land cus­tomers pay five times what Hong Kong tele­com sub­scribers pay for vir­tu­ally the same 4G pack­age, pre­sents a per­fect ex­am­ple of the re­gional dis­par­ity in tele­com rates. No won­der there’s a howl across the bor­der ac­cus­ing the tele­coms gi­ant of re­gional dis­crim­i­na­tion.

Main­land con­sumers may choose from five monthly China Mo­bile pack­ages. The least ex­pen­sive costs 88 yuan for a pack­age of­fer­ing 0.4 gi­ga­bytes (GB) of In­ter­net us­age and 200 min­utes of do­mes­tic calls per month. The top-of-the-line pack­age is 588 yuan, pro­vid­ing 5GB of mo­bile data and 4,000 min­utes of calls na­tion­wide. Ex­tra ser­vices cost 40 yuan per 0.4GB and 280 yuan per 5GB.

China Mo­bile Hong Kong (CMHK) sub­scribers get a much bet­ter deal.

CMHK sub­scribers may choose from among three pack­ages. The low­est — priced at HK$128 (about 100 yuan) — of­fers 1GB of mo­bile data and 1,800 min­utes of phone us­age monthly. At the top of the price range, for HK$298 (about 240 yuan), Hong Kong sub­scribers can get 10GB of In­ter­net us­age plus un­lim­ited calls within Hong Kong. And, for an ex­tra 0.5GB, users pay HK$30 (about 24 yuan).

China Mo­bile, on its of­fi­cial Weibo site, re­sponded to ac­cu­sa­tions of will­ful dis­crim­i­na­tion, claim­ing that “re­gional pric­ing” is com­mon prac­tice among multi­na­tional com­pa­nies.

Ac­tu­ally, the com­pany is right and the wide vari­ance in the present sit­u­a­tion may be ex­plained as “hot com­pe­ti­tion”.

Hong Kong sits vir­tu­ally atop the world in mo­bile In­ter­net mar­ket pen­e­tra­tion. That’s the foun­da­tion for a mar­ket that is ex­tremely com­pet­i­tive, to say the least.

Hong Kong govern­ment data shows that the city has mo­bile de­vice pen­e­tra­tion ex­ceed­ing 223 per­cent. House­hold broad­band pen­e­tra­tion is more than 86 per­cent. Ac­cord­ing to the sta­tis­tics, Hong Kong, with a pop­u­la­tion of only 7.1 mil­lion, had 9.8 mil­lion 3G cus­tomers and 2.3 mil­lion 4G cus­tomers as of Jan­uary this year. The mo­bile-data us­age per user, in­clud­ing 2.5G, 3G and 4G, is 976 megabytes per month on aver­age.

Fre­quent merg­ers and ac­qui­si­tion­shaveadded­fu­el­tothe­hot­lo­cal com­pe­ti­tion. The mar­ket en­vi­ron­ment is a sig­nif­i­cant fac­tor lo­cal tele­com providers con­sider when set­ting their mar­ket­ing strate­gies.

There are cur­rently five tele­com oper­a­tors in Hong Kong — China Mo­bile Hong Kong, CSL Limited, Hong Kong Telecom­mu­ni­ca­tions (HKT) Limited, Hutchi­son Tele­phone Com­pany Limited and SmarTone Mo­bile Com­mu­ni­ca­tions Limited. All pro­vide com­par­a­tively low-cost 3G and 4G ser­vices.

Richard Li Tzar-kai — the younger son of ty­coon Li Kash­ing — bought a 76.4-per­cent stake in CSL New World for $1.8 bil­lion. The deal was ap­proved by the govern­ment this month. CSL op­er­ates two tele­com ser­vices in the city — 1010 and One2Free.

The CSL ac­qui­si­tion re­duced the num­ber of Hong Kong tele­com oper­a­tors from five to four. HKT-CSL still holds the largest mar­ket share, about one-third of the to­tal mar­ket share.

Op­er­at­ing un­der the PCCW um­brella, HKT is Hong Kong’s leading tele­com op­er­a­tor, with op­er­a­tions in land­line, broad­band, tele­vi­sion and com­mu­ni­ca­tions ser­vices.

The first commercial 4G, or “Fourth Gen­er­a­tion” ser­vice, went into oper­a­tion in the SAR in Novem­ber 2010. Tele­com oper­a­tors set up spe­cial pack­ages that are at­trac­tive to their ex­ist­ing cus­tomers.

PCCW, HKT’s par­ent com­pany, for ex­am­ple, put up a pack­age for HK$148, of­fer­ing 1GB of us­age and un­lim­ited calls within Hong Kong. For the higher price of HK$238, or 200 yuan, users get ac­cess to 5GB. A com­peti­tor, Three Hong Kong, charges HK$239 a month for 5GB.

Hong Kong boasts about 20,000 pub­lic Wi-Fi ac­cess points that pro­vide free In­ter­net ac­cess.

These bold moves in the ini­tial stages of 4G have helped to ed­u­cate the mar­ket and place it on a solid foot­ing.

A spokesper­son for the Of­fice of the Telecom­mu­ni­ca­tions Author­ity (OFTA) said that in a fully lib­er­al­ized mar­ket like Hong Kong, prices for mo­bile­ser­vices plans are de­ter­mined by mar­ket forces.

Given the keen com­pe­ti­tion in the city’s mo­bile-ser­vices mar­ket, con­sumers have broad choices of mo­bile-net­work oper­a­tors and ser­vice to suit in­di­vid­ual needs. They can choose ser­vice providers based on price, pro­mo­tional or prod­uct of­fer­ings, cus­tomer ser­vice, net­work cov­er­age and ser­vice in­no­va­tion.

Jane Zhang, Gart­ner’s prin­ci­pal re­search an­a­lyst in car­ri­ers and mo­bile ser­vices, said it is com­par­a­tively eas­ier for car­ri­ers to pro­mote 4G ser­vices in Hong Kong given the be­nign in­fra­struc­ture and pop­u­lar­ity of the mo­bile In­ter­net.

Ash­ley Sheng, a tele­com an­a­lyst with Shang­hai-based Shenyin & Wan­guo Se­cu­ri­ties Co, noted the fierce com­pe­ti­tion in Hong Kong com­pared with the main­land. “China Mo­bile holds a mo­nop­oly on the main­land, so it can set very high prices for the new tech­nol­ogy. In Hong Kong, where 4G has been pop­u­lar, China Mo­bile has so many lo­cal com­peti­tors and it has to fol­low lo­cal rules,” Sheng said.

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