YOU ARE AT:CarriersChina Telecom open to new partners, distribution channels

China Telecom open to new partners, distribution channels

GUANGHZOU, China – Transformation. The phrase was an overarching theme during a couple of events here as operators and equipment vendors evolve to meet challenges that arise from a fast-paced wireless industry where devices and applications are taking center stage, forcing the world’s largest operators to change the way they do business to remain relevant to their customers.
China Telecom transformation
Speakers at the CDMA Development Group’s third annual CDMA World Forum and at Huawei Technologies Co. Ltd.’s joint day-long event with China Telecom (CHA) noted that today’s customers, who are interested in devices and applications, are forcing them to change some business practices.
China Telecom is a newcomer to the wireless arena, but a newcomer with much energy as it tries to converge the wireless and wireline experiences for its customers. In 2008, China Telecom picked up China Unicom’s 27 million subscribers as part of a major government-mandated restructuring within the Chinese telecom market. Today, China Mobile dominates with its 584 million GSM-based subscribers, followed by China Unicom, which boasts 167 million subscribers. For its part, China Telecom has watched its subscriber base skyrocket to surpass 100 million subscribers in just three years, making it the largest CDMA2000 operator in the world.
“Life is still not so easy,” despite the huge accomplishment, noted Richard Zeng, deputy managing director of the global business department within China Telecom, because the mobile business is so different from the fixed-line environment. “The three major operators in China are split from one big tree and China Telecom is that one big tree.”
Three trends are driving China Telecom’s strategy, Zeng said. Customers today are looking for more than quality of service and pricing, but the combination of the network, product, service and the right marketing touch. Technology development is important as well, as customers demand new services and applications to meet their needs. Finally, the lifecycle for products and services is shortened. Customers change devices an average of every 15 months, and teens change even more often, Zeng said. Because of this, the operator cannot rely on one business model. By the end of the first quarter of 2011, China’s mobile penetration rate stood at 68%, with close to 900 million people using wireless service. Mobile web users in China should surpass 400 million in 2012, which will outpace the number of people using fixed-line broadband services, Zeng noted.
China Telecom has built out 3G services in 324 cities, 2,055 counties and 80% of villages and towns. Like some of its global counterparts, the operator is at the beginning stages of offloading traffic from the 3G network to Wi-Fi networks to accommodate data demands.
Device, marketing transformation
New business opportunities, including cloud-based services, are being presented. And China Telecom, which has a reputation as controlling the user experience with tight demands on its suppliers, is opening its distribution models and channel development to reach its customers beyond China Telecom’s traditional channels. “The handset is becoming more important to customers,” Zeng said. Whereas China Telecom used to make pricing its main priority, it now must transition to making a wide variety of devices available to its customers. Today, when customers are picking out new services, the operator is most interested in what the customer plans to do with the device – stream video, browse the web or download applications – when trying to match the customer to the right plan, device and service.
Interestingly, China Telecom will have roughly the same number of subscribers as a combined AT&T Mobility/T-Mobile USA Inc. And yet, the operator held a device fair here that felt similar to CTIA’s big trade show. Some 300 chip and device manufacturers displayed devices they can build for China Telecom customers. In short, with a population of 1.3 billion, the sheer weight of the potential in China is likely driving manufacturers to treat the country like no other.
Roaming transformation
China Telecom said it is also treating its customers different. Enterprises, especially multinational companies, are demanding international roaming agreements. China Telecom has offices now in Europe and the United States, among other cities. Because CDMA technology does not enjoy the breadth of its GSM counterparts, China Telecom has struggled with international roaming agreements. The operator is transforming those international roaming deals, with CDMA to CDMA and CDMA to GSM deals. In 2010, the carrier signed a major roaming pact with Vodafone Group plc. Sun Kangmin, a VP with China Telecom Group, said the carrier is the first in China to offer international Wi-Fi roaming for its customers.
Enterprise transformation
China Telecom also changed its support services to better partner with its enterprise customers, said Liang Zhiping, director of VIP Customer Department of China Telecom Group. The operator is working with 20 partners to address the enterprise market, focusing on government, financial services, social services, insurance, the travel industry, media and healthcare. Zhiping’s team works with customers early on product development, uses one ICT support team to pre-sell services to enterprise so they can customize product offerings early in the relationship, one-stop customer services for support services once the product has been launched, and is also moving to offer a platform for cloud-based services.
Network transformation
Transformation is also taking place on the vendor level. Hauwei has reorganized its networks business to ensure its operator customers that their migration paths to new technologies are part of their existing business plans, said Kevin Wu, with Huawei’s CDMA and LTE product line. CDMA is now coupled with LTE, as is the GSM-based business coupled with LTE because operators are all moving to next-generation networks starting from different paths and with different needs. Even operators that are moving to LTE quickly will continue to use their 2G and 3G networks for voice services for the next five years. Initially, when 4G services became evident, CDMA customers were worried whether vendors would continue to innovate and support CDMA technology, but those concerns have been allayed today.
Huawei is making its technology broader, closer and smarter, commented Alex Wong Yufeng, VP of the CDMA product line at the vendor. 3G networks were not built for 4G services, Yufeng said, comparing the transformation to a child who is growing up but still wearing old clothes that no longer fit.
Device transformation
Huawei’s device business is also embarking on a campaign to move from being a white-labeled device manufacturer to one that will try to brand the Huawei name globally. The process will take years, but the company realizes it needs to start with a single step, said Victor Xu, director of marketing development at Huawei. The company has ambitious plans to be in the top five world’s largest device manufacturers by 2013, Xu said, laying out a multi-year strategy. Huawei also wants to lead in M2M communications in the connected home and keep its lead in mobile broadband products.
This transformation includes expanding the company’s product portfolio, boosting its branding and building new channels with distributors.
For its part, Sprint Nextel Corp. is moving to decouple its frequencies relationship from the technologies it uses, said Manish Mangal, director of Sprint Technology Developme
nt, during the CDMA Development Group’s third annual CDMA Wor
ld Forum. The time line for new technologies is compressing. Every time we launch a new device, data consumption jumps,” and Sprint is getting ready to launch the world’s first 3D phone this summer. Traffic patterns are no longer predictable. An operator used to be able to predict how the traffic would manifest at 5 p.m. and how it would peak for a short period of time as people went home from work. Today, most traffic takes place in the home, followed by the office.
Sprint is also transforming its relationship with its customers by working with developers to package applications better for end users. A Hannah Montana app pack may contain between eight and 10 apps that appeal to tweens.

ABOUT AUTHOR

Tracy Ford
Tracy Ford
Former Associate Publisher and Executive Editor, RCR Wireless NewsCurrently HetNet Forum Director703-535-7459 [email protected] Ford has spent more than two decades covering the rapidly changing wireless industry, tracking its changes as it grew from a voice-centric marketplace to the dynamic data-intensive industry it is today. She started her technology journalism career at RCR Wireless News, and has held a number of titles there, including associate publisher and executive editor. She is a winner of the American Society of Business Publication Editors Silver Award, for both trade show and government coverage. A graduate of the Minnesota State University-Moorhead, Ford holds a B.S. degree in Mass Communications with an emphasis on public relations.