China Mobile outlines strategy to relieve operator pressures

Carriers can overcome increasing business pressure by looking to cloud computing, faster network technology and "Internet of Things", says China Mobile Chairman Xi Guohua.

China Mobile believes it can combat major challenges it faces today by focusing on cloud computing, faster network technology, the "Internet of Things" and its Wireless City initiative.

During his keynote address Wednesday at the opening of the GSMA Mobile Asia Expo 2012 in Shanghai, China, China Mobile Chairman Xi Guohua acknowledged the company was facing major challenges including the "ever-increasing network pressure".

Xi explained: "The value chain is changing. In the past, the value chain was dominated by operators but now it's operators, device manufacturers, content providers, and everyone is taking a great role in this value chain. The ranking of operators in the FTSE [Nasdaq] 500 is dropping, while others are improving."

The FTSE 500 comprises 500 Nasdaq-listed companies with the largest market capitalization.

Noting that China Mobile last year saw mobile data levels on its network spike by 70 percent, Xi said this number was expected to increase to over 150 percent this year. "While data traffic has brought income for operators, they then have to invest in the network, so we have to strike a delicate balance," he said.

He added that carriers also needed to address perceptions they were merely "dumb pipe" providers and reevaluate their business model which was facing competitive threats.

He noted that while operators excelled in providing stable services, the Internet business was characterized by faster cycles and developments. "The traditional business model and strength of operators have, therefore, become a constraint in the new business world," he said.

M2M, TD-LTE, Wireless City
Industry growth, however, had created tremendous opportunities for operators, Xi said, pointing to the Internet mobile user base which was projected to hit 2.1 billion by 2015.

To tap this lucrative market, he said China Mobile will focus on cloud computing and the Internet of Things, also known as machine-to-machine communication.

According to Xi, in the next two years, more than 3.5 billion industrial product units will be connected via Internet and mobile communication. "User [base] of Internet of Things for China Mobile has been increasing at 60 percent," he revealed.

He added that the Chinese operator would deploy 20,000 TD-LTE base stations in 13 cities across China by year-end, with "very likely" plans to expand this target.

"We need to transform the business model, innovate and develop new markets," Xi concluded. "At China Mobile, our strategy is smart pipes, plus open platforms, plus user-friendly interfaces, plus unique services."