When the heat is on
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.