OTT players further squeeze traditional telecom biz in China

Growing popularity of apps such as WeChat and Weibo, which enable users to send out greetings during the Chinese New Year, have substantially encroached revenue from voice call and SMS--the main income of traditional telecom players in China.
Written by Cyrus Lee, Contributor

During the eve of the Chinese New Year on Saturday, the three major telecom carriers in Beijing together sent out 1.16 billion SMSes, which was basically in line with the 1.1 billion SMSes sent across the city last year. The number of messages sent per capita, though, fell to 36 this year from 42 last year due to the popularity of WeChat, according to Xinhua News.

WeChat is a WhatsApp-like app operated by Tencent and offers various functions including voice recording, text, facial expressions, pictures, video, location, as well as video chat. The mobile instant messaging app has registered members exceeding 300 million across the world, which theoretically would have made it the second-largest "carrier" in China in terms of user numbers, noted the report.

The free app is widely used among smartphone users in the country as it delivers text and picture messages between two registered members free of charge as long as there is a Wi-Fi connection. Young people in China also love to send out voice messages through WeChat, which also has affected voice calls usage among telecom carriers here.

The Ministry of Industry said earlier that mobile phone users in China reached 1.11 billion as of end-2012, with mobile phone penetration rate posting 12.2 percent year-on-year growth. However, SMS volumes over the territory only increased by a tepid 2.1 percent to 897.31 billion last year. The slower growth meant the number of SMSes sent per capita is decreasing in China.

OTT (over-the-top) players including WeChat have squeezed the margins of traditional operators, notably, posting huge challenges to SMS, voice calling, as well as international voice calling services, according to Li Yue, CEO of China Mobile, one of the country's major telecom carrier.

Besides WeChat, microblogging service Sina Weibo--with 300 million registered members--is available via the Web and mobile app, allowing users to directly post notes, pictures, videos and audio. It also has become one of the most popular platforms for Chinese users to exchange information.

According to Sina News, Sina Weibo clocked 34,977 posts in just the first second on the first day of the Chinese New Year. This number grew to 731,102 in the first minute alone.

Editorial standards