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Semelhante a china vas - mobile value added services in china (20)
china vas - mobile value added services in china
- 3. Summary Report
VAS CHINA Project
March 2005 – February 2006
Mobile Value-Added Services in China
Project Summary Report
Bernhard Holtkamp (Ed.)
January 2006
Funded by the European Union
In the 6th Framework Program
under contract number FP6-2004-IST-3-015774
© VAS CHINA Project [FP6-2004-IST-3-015774] 3
- 4. Summary Report
Editor
Dr. Bernhard Holtkamp
Fraunhofer Institute for Software and Systems Engineering (ISST)
Emil-Figge-Straße 91
44227 Dortmund
Germany
Bernhard.Holtkamp@do.isst.fraunhofer.de
© VAS CHINA Project [FP6-2004-IST-3-015774 4
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Contributors
BUPT
Prof. Shiduan Cheng
Dr. Yuhong Li Chongqiu Tao
Dr. Qiang Yan Xiaopeng Li
Kuifei Yu Huifang Jin
Dr. Jian Ma
Dr. Seppo Hamalainen
Na Li
Dr. Yue Fei
Shudong Liu
Lucy Lee
Dr. Bernhard Holtkamp
Dr. Päivi Kallio
Mika Hongisto
© VAS CHINA Project [FP6-2004-IST-3-015774] 5
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Contents
1 Objectives of the Project 12
2 Approach 14
3 VAS Situation in China 16
3.1 Economic Environment of Value-Added Services 17
3.1.1 The Economic Prosperity Stimulates the Increase of the
Telecommunication Requirement 17
3.1.2 The Improvement of the People’s Living Standard Promotes
the Change of Telecommunication Requirements 17
3.2 Political Environment of Value-Added Services 20
3.2.1 Supervision and Regulation on Telecommunications 20
3.2.2 Effects of Policies on Mobile VAS 21
3.3 Technical Environment of Value-Added Services 22
3.3.1 The Influence of IP 22
3.3.2 The Influence of Soft Switch Technology 23
3.3.3 The Influence of 3G Technology 24
3.3.4 The Influence of Terminal Technology 24
3.4 Conclusion 25
4 Mobile VAS Value Chain 26
4.1 Mobile Network Operators 29
4.1.1 China Mobile Communications Corporation 30
4.1.2 China United Telecommunications Corporation 33
4.2 Service Providers and Content Providers 34
4.2.1 SINA Corporation 35
4.2.2 SOHU Corporation 38
4.2.3 TOM Online Inc. 39
4.2.4 NetEase 40
4.2.5 Tencent 41
4.2.6 Linktone 41
4.2.7 Mtone Wireless 42
4.2.8 KongZhong Corporation 43
4.3 Equipment Manufacturers and Terminal Manufacturers 44
4.4 End Users 45
4.4.1 End User Status and Market Requirements 45
4.4.2 The Demand Trend of Mobile VAS Market 55
4.4.3 Conclusion 60
4.5 Ministry of Information Industry 60
4.5.1 Duties 60
4.5.2 Departments 61
© VAS CHINA Project [FP6-2004-IST-3-015774 6
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5 Mobile Value-Added Services 65
5.1 Pricing of VAS Services 65
5.2 Popular Services 66
5.2.1 Short Message Services (SMS) 66
5.2.2 Multimedia Messaging Services (MMS) 69
5.2.3 Individualized Ringing Tone Service 71
5.3 Emerging Services 73
5.3.1 Mobile Phone Games 74
5.3.2 Interactive Voice Response (IVR) 79
5.3.3 LBS (Location-Based Service) 81
5.3.4 Streaming Media 84
5.3.5 M2M (Machine to Machine) 85
5.3.6 Other Emerging Services 86
5.4 Analysis of the Development of Mobile VAS in China 86
5.4.1 Development Features 87
5.4.2 Development Structure of Mobile VAS 87
5.5 Selected Mobile VAS Services 89
5.5.1 M2M in China 89
5.5.2 Sample VAS Services 90
5.5.3 Mobile Virus Killing 91
5.6 Mobile VAS Technology Issues 91
5.6.1 SIP 92
5.6.2 OMA Digital Rights Management 92
5.6.3 Location-Based Services (LBS) 92
5.6.4 Importance of These Technologies for the Chinese VAS
Market 92
5.7 International Developments 92
5.7.1 VAS in Germany 93
5.7.2 M2M in Germany 93
5.7.3 VAS in Finland 94
5.7.4 France Telecom Orange Mobile VAS Experiences 96
6 VAS Market Entry Process in China 98
6.1 Telecoms Regulations and Policies 99
6.1.1 Network Construction 99
6.1.2 Regulations and Policies on FITEs 100
6.1.3 Commitments to WTO Regarding VAS 101
6.2 Phase 1: Partnering with a Chinese Company 101
6.2.1 Foreign Investment Telecommunications Enterprises (FITE) for
Value-Added Services 103
6.2.2 FITE Registration Process 103
6.3 Phase 2: Getting a Service Provider License 104
6.3.1 VAS License Application Process 104
6.3.2 Licensing Situation 107
6.4 Phase 3: Cooperation with Mobile Operators 107
6.4.1 China Mobile 108
© VAS CHINA Project [FP6-2004-IST-3-015774] 7
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6.4.2 China Unicom 109
6.4.3 How to Become a VAS Partner of China Unicom 109
7 VAS CHINA Project Networking 116
7.1 Ministry of Information Industry 116
7.2 Mobile Operators 118
7.2.1 China Mobile 118
7.2.2 China Unicom 119
7.2.3 GD Unicom 119
7.2.4 GZ Mobile 120
7.3 Service Providers 120
7.3.1 TOM Online 120
7.3.2 Biao Qi Century Data Communication Technologies 121
7.3.3 Tencent 122
7.3.4 Linktone 122
7.3.5 A8 Music Group 123
7.4 Related Organizations 123
7.4.1 VAS Committee China (VASC) 123
7.4.2 EU Chamber of Commerce 124
7.4.3 DVB Project PARTAKE 124
7.4.4 eShip 125
7.4.5 International Financing Investment Consultancy Company
Ltd. (IFIC) 125
8 Conclusion 127
9 References 129
10 Sources 130
A Project Consortium (Alphabetical Order) 135
A.1 Beijing University of Posts and Telecommunications, BUPT,
China 135
A.2 France Telecom 137
A.3 Fraunhofer ISST, Germany 139
A.4 Nokia Research Center / Nokia (China) Investment Company
Ltd, China (Project Coordinator) 140
A.5 VTT Technical Research Centre of Finland 142
© VAS CHINA Project [FP6-2004-IST-3-015774 8
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List of Figures
Figure 1 VAS CHINA project workflow and results .....................................14
Figure 2 Mobile VAS revenue and its share in the whole mobile service
market.........................................................................................16
Figure 3 The architecture for providing VAS in the next generation packet-
based voice network ....................................................................23
Figure 4 VAS value chain members and relationships.................................27
Figure 5 I-Mode value chain ......................................................................28
Figure 6 Monternet value chain .................................................................28
Figure 7 Departments of CMCC ................................................................32
Figure 8 Organization of the CMCC data service department ....................33
Figure 9 Organization of China Unicom.....................................................34
Figure 10 Important factors influencing users for using SMS service.............47
Figure 11 Age distribution of mobile phone game users ..............................50
Figure 12 Education of mobile phone game users........................................51
Figure 13 Income of mobile phone game users............................................51
Figure 14 Distribution of mobile game content............................................52
Figure 15 Market share of mobile phone game in 2004...............................53
Figure 16 Expectations of free WAP contents ..............................................54
Figure 17 Using frequency investigations of several WAP services ................55
Figure 18 Reasons why high-end users are not satisfied with current mobile
VAS .........................................................................................59
Figure 19 Increase of SMS in China from 2001 t0 2004...............................67
Figure 20 Growth of SP revenue..................................................................67
Figure 21 Market share among SPs in 2003.................................................68
Figure 22 MMS market shared by SPs in 2003. ............................................70
Figure 23 Market share of mobile phone game platform in 2004 ................76
Figure 24 Market shares of different types of mobile phone games .............76
Figure 25 Mobile game industry chain .........................................................77
Figure 26 Market of IVR shared by SPs.........................................................80
Figure 27 Number of mobile VAS users .......................................................88
Figure 28 Revenue structure of mobile VAS market in China .......................88
Figure 29 Mobile services markets in Finland 2002–2005 (M€) (Source: [2]).95
Figure 30 The number of mobile terminals with colour displays, GPRS, WAP,
MMS and Java in Finland (Source: [2]) ..........................................96
Figure 31 Overview of the VAS market entry process in China .....................98
Figure 32 Phase 1: Setting up a FITE ..........................................................102
Figure 33 Phase 2: Applying for a service provider license ..........................105
Figure 34 Phase 3: Partnering with a mobile operator................................108
Figure 35 Procedure of application for qualification and services................112
Figure 36 Procedure of service testing and contract ...................................113
Figure 37 Settlement procedure ................................................................115
© VAS CHINA Project [FP6-2004-IST-3-015774] 9
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List of Tables
Table 1 Mobile VAS used by high-end users ................................... 18
Table 2 The interest degree (%) of high-end users in VAS provided by
future 3G network............................................................. 19
Table 3 Mobile VAS used by high-end users ................................... 56
Table 4 The interest degree (%) of high-end users in VAS provided by
future 3G network............................................................. 58
Table 5 Comparisons of LBS solutions ............................................ 81
Table 6 Materials needed during the application .......................... 111
© VAS CHINA Project [FP6-2004-IST-3-015774 10
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Abbreviations
3G Third Generation
ADSL Asymmetric Digital Subscriber Line
ARPU Average Revenue Per Unit
BBS Bulletin Board Service
BUPT Beijing University of Posts and Telecommunications
CDMA Code Division Multiple Access
CM China Mobile
CMCC China Mobile Communication Corporation
CP Content Provider
CU China Unicom
DRM Digital Rights Management
EUCC
FITE Foreign Invested Telecomm Enterprises
GPS Global Positioning System
GSM Global System for Mobile communications
IP Internet Protocol
ISP Internet Service Provider
IVR Interactive Voice Response
JV Joint Venture
LBS Logical Block Addressing
M2M Machine-to-Machine
MII Ministry of Information Industry
MISC Management Information Services Center
MMS Multimedia Messaging Service
MofCom Ministry of Commerce
OMA Open Mobile Alliance
PRC People’s Republic China
RBT Ring Back Tone
RMB Renminbi (China’s currency)
SIM Subscriber Identity Module
SIP Session Internet Protocol
SMS Short Messaging Service
SP Service Provider
TAB Telecommunication Administration Bureau
VAS Value Added Services
VASC Value Added Service Committee
WAP Wireless Application Protocol
WLAN Wireless Local Area Network
WTO World Trade Organisation
© VAS CHINA Project [FP6-2004-IST-3-015774] 11
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1 Objectives of the Project
The first service for mobile phones was "voice". As we know, mobile "voice"
was everywhere a great success. But in China its growth has been geometric: in
1998 less than 10 million subscribers and now 6 years later over 300 million
subscribers. The first VAS technology introduced to China was the short
message service (SMS). It came to China relatively late since both mobile
operators and officials believed that "SMS is a European success story – and
SMS will never become a success in China".
Examples and success stories from Europe were essential, but finally SMS was
ignited into Chinese awareness by a local idea. Chinese Internet SMEs offered
to send "good news" messages when Chinese won medals at Sydney Olympic
Games. SMS service was a success and proved that there are real business
opportunities with VAS. In 2004 Chinese already sent some 30.000 million SMS
per month and growth still continues.
Since then more VAS technologies, applications and services have been
introduced for mobile phones in China. Operators are eager to take more
benefit of their massive subscriber base via VAS.
Here are some examples of VAS offered in China:
• short message services (ring tones, other)
• Java downloading services (games)
• Internet browsing (entertainment, sport news, etc)
• multimedia messaging service (MMS)
• location-based services (LBS)
Since SMS a lot of learning has happened. New Chinese words have been
invented to describe various VAS services. The process on how new VAS
technologies are getting into market is developing. It is a complex process with
evolving regulations, standards, rules, tests, trials, technical forums, and finally
business models, tariffs, application developers and more.
We see continuous progress with VAS but yet, there is neither clear, known
guideline nor process on how Chinese mobile operators adopt European or
global mobile VAS technologies into use and into end-user benefits.
For every organization VAS is a learning process but in China VAS has strong
impact on society and culture, too. Continuously more new global VAS
technologies are getting mature. Here are a few examples:
• Push-to-talk over Cellular (PoC) service ; “walkie-talkie” service, which will
enable other new services when combined with existing VAS technologies
© VAS CHINA Project [FP6-2004-IST-3-015774 12
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e.g. messaging, location-based services, or when taken as an element into
applications e.g. mobile games, enterprise applications
• TV broadcast to mobile based on DVB-H which will enable the birth of
whole array of new innovative applications via mobile network
• Payment solutions which use mobile phones
Each new VAS technology enables creation of new categories of applications
and services. By combining existing and new VAS services, complexity grows
but so do opportunities for both Chinese and European SME industries.
Chinese market is reactive, so understanding of the situation by Europeans
could give us some "first-mover advantage". To be able to enter the Chinese
market European companies in general and SMEs in particular need to
understand the specifics of this market, its rules and regulations, entry
processes and requirements, time-schedules. To be able to sell their
applications European SMEs need to match make and localize their products
for Chinese taste. Hence, “information” is the most important tool for
European SMEs to be able to cooperate with Chinese partners and to enter the
Chinese market.
The mission of the VAS CHINA project was to challenge the existing unclear
flow related to VAS technologies entry into China market. With a systematic
approach we tried to learn, understand and map a process and to develop
positive networking between organizations and individuals.
More precisely, VAS CHINA project objectives were:
1 To identify and network with those Chinese organizations which are key
influencers in the market-entry process for new VAS technologies: to
create contacts and to find possible partners to explore the possibilities of
VAS in China
2 To produce information which will clarify, "map" the process of how
China accepts and adopts new VAS technologies
3 To recognize and produce information about China-specific needs related
to existing and future mobile Values Added Services, and produce policy
recommendations to improve the situation with Chinese-European co-
operation
4 To introduce the results to interested EU-parties
Compared to many other industries, VAS technologies represent a new
innovation space with lots of room. European SMEs are famous about their
innovative products related to mobile VAS technologies and applications. But
being famous is not enough if wanting to do business in China. The ultimate
goal of this project is to provide European SMEs access to latest information
about VAS in China. Quality information will enable fast, rational decisions.
© VAS CHINA Project [FP6-2004-IST-3-015774] 13
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2 Approach
The picture below clarifies the workflow and the results distribution of the VAS
CHINA project.
Figure 1 VAS CHINA project workflow and results
During the monthly workshops every consortium member learned about
Chinese organizations which participate into China VAS process; their role and
linkage to other actors.
During the workshops consortium members were introduced to Chinese
organizations that have role in China’s VAS entry process. The leading partner
for this is BNRC.
During the monthly workshops each consortium member “tested” the China
VAS entry process by looking it from their focus angles; technology,
applications, services.
© VAS CHINA Project [FP6-2004-IST-3-015774 14
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VTT was the leading partner in the work to develop the understanding about
the Chinese organizations and their roles in China VAS process, and to map
and develop China VAS entry process. All consortium members naturally
contributed to this work.
VTT and Fraunhofer ISST produced (round-robin basis, 50/50 of the workshops)
a condensed report about each monthly workshop’s results and findings. These
reports, written in English, have been made public through the VAS CHINA
project home page (www.vas-china-project.org), maintained by Fraunhofer
ISST, and were delivered to the Commission. This up-date of findings has also
become part of the VAS CHINA Summary Report.
During the VAS CHINA project the Europe-located consortium members, VTT
and Fraunhofer ISST, visited the workshops in Beijing 5 times each. One of the
workshops was held in Guangzhou in South-China. Guangzhou has advanced
mobile services and local VAS-actors’ view needed to be collected.
The project’s web-site includes information about the VAS CHINA consortium,
project plan, and monthly workshop reports summarizing the up-dates of the
findings. The VAS CHINA Summary Report, Seminar Report, and Final Report
are also added to the web-site.
© VAS CHINA Project [FP6-2004-IST-3-015774] 15
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3 VAS Situation in China
In recent years, the market of mobile communications has developed very fast.
Mobile phone is affecting the way of people’s life. Correspondingly, mobile
VAS increases also very fast. Both the amount of mobile users and the
requirement of the users on different kinds of services ascend greatly. So far,
about 80% of mobile phone subscribers use VAS. The revenue increase of
mobile VAS has exceeded the increase of other telecommunication services. As
shown in Fig. 2, the market scale of mobile VAS was 1.98 billion RMB Yuan in
mainland China in the year 2001, and in 2002, it reached 9.36 billion RMB
Yuan. This means that the market has increased 373% compared to the
preceding year. And in 2003, the revenue of mobile VAS was 23.32 billion RMB
Yuan. It is expected that in 2006 the market of mobile VAS can reach 70 billion
RMB Yuan. From this figure we can also see that the revenue share of mobile
VAS to the total mobile services increases also annually.
160 35.00%
152
143
140
29.20% 29.70%30.00%
126
27.30%
120
25.00%
100 94 22.10%
20.00%
18.40%
80
70
15.50% 15.00%
60
12.20% 52
10.00%
40 35
6%
5.00%
20 4.30% 23.32
9.36
1.98
1.10%
0 0.00%
2001 2002 2003 2004e 2005e 2006e 2007e 2008e 2009e 2010e
Revenue of mobile VAS (billion RMB) Share of mobile VAS to the whole mobile services
Figure 2 Mobile VAS revenue and its share in the whole mobile service market
Now there are more than 70 thousand types of mobile VAS. These services can
be divided into mobile Internet content/application services, mobile Internet
access services and mobile value added voice services. According to the running
platform, mobile VAS can be classified into five categories at present in the
Chinese market. They are SMS, MMS, WAP, JAVA/BREW and IVR. And
according to the contents and applications, the services can be classified into
communications, business and trading, information support and entertainment
© VAS CHINA Project [FP6-2004-IST-3-015774 16
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etc. In the following, we analyze some typical mobile VAS currently popular
and emerging in China.
It is no doubt that the external environment can produce great influence on the
development of mobile VAS. In the following, we will introduce the economic,
political and technical environment in China from the perspective of
telecommunication industries, and analyze their possible influence on mobile
VAS in China.
3.1 Economic Environment of Value-Added Services
3.1.1 The Economic Prosperity Stimulates the Increase of the Telecommunication
Requirement
The Chinese economy keeps fast development in 2004 after the GDP broke
through 11,000 billion RMB Yuan in 2003. Some authoritative international
organizations, such as World Bank, IMF etc. have adjusted the prediction about
the annual increment of Chinese economy to over 9%.
With the development in economy, the living standard of Chinese people has
improved significantly. Demand on housing, autos and telecommunications is
increasing strongly. This enlarges the Chinese telecommunication market, and
provides also an economic guarantee for the development of the
telecommunication services.
3.1.2 The Improvement of the People’s Living Standard Promotes the Change of
Telecommunication Requirements
The economic development influences not only the total amount of the
telecommunication requirement, but also the trend of the content changes of
the telecommunication requirement. After some basic telecommunication
requirements have been satisfied, people want more and more comfortable,
intelligent, individual and entertainment services. How to provide more value
added services and keep the increase of the revenue has become the focus for
the telecommunication enterprises.
Requirement on mobile VAS
Mobile VAS plays a more and more important role in the telecommunication
market with the economic development. Table 1 illustrates the services used by
high-end users nowadays.
© VAS CHINA Project [FP6-2004-IST-3-015774] 17
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Beijing Shanghai Shenzhen Wuhan Chengdu Kunming
Mobile phone SMS 93. 3% 95.7% 98.8% 96.6% 98.8% 91.9%
Mobile phone lottery 8. 0% 4. 3% 43.0% 18.2% 17.6% 11. 3%
Mobile phone stock 8 .0% 18.8% 16.4% 28.4% 16.4% 8.1%
Web SMS 26.7% 38.2% 23.6% 29. 5% 43.6% 41.3%
Mobile phone E-mail 43. 3% 57.0% 50.3% 51.1% 50. 3% 31.9%
Mobile phone 26.0% 46.8% 38.8% 19.9% 28.5% 31.9%
information ordering
Mobile QQ 28.7% 54. 3% 23.6% 34.7% 43.0% 40.0%
Mobile phone online 39.3% 44.6% 52.7% 44.3% 66.1% 43.1%
game
Web browsing 50.0% 62.4% 29.1% 38.6% 60.0% 25.6%
Color messages/Color E 29.3% 53.2% 18.2% 23. 3% 31. 5% 18.1%
Mobile phone 8.7% 22.0% 6.7% 9.7% 4.8% 2.5%
online shopping
Mobile phone pictures & 54.0% 65.6% 49.7% 49.4% 49.7% 74.4%
ring tone downloading
Travel services 10.0% 1.1% 7. 3% 19. 3% 7. 3% 31. 9%
Case= 150 186 165 176 165 160
Table 1 Mobile VAS used by high-end users
The data illustrates that many types of mobile VAS other than the widely used
SMS are required by the end users from different cities nowadays. Receiving
and sending Email and network browsing are widely required and used. In
addition, the individual services, such as downloading from the networks are
also welcome currently. Moreover, users from different cities display also great
interest in online games. Other inquiries have also revealed that the customs
who have not used VAS show low interest on the existing services,
nevertheless, they are interested in some new emerging services, such as online
translation, pictures upload etc.
Table 2 shows the interest degree of high-end users in mobile VAS provided by
future 3G mobile network systems. From this inquiry we can see that high-end
users believe that sending images to friends and relatives will be the most
popular services in the future 3G system. Moreover, web browsing and E-mail
sending and receiving through mobile phone are also the desired services by
high-end users.
© VAS CHINA Project [FP6-2004-IST-3-015774 18
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City Beijing Shanghai Shenzhen Wuhan Chengdu Kunming Total
Case= 150 186 165 176 165 159 1001
Transmitting images to 15.9 14.9 14.6 15.8 17.1 14.1 15.4
friends or relatives
Web browsing 14.6 15.8 13.6 15.2 15.6 13.3 14.7
Transmitting information 14.3 14.7 14.4 14.8 16.0 13.1 14.6
with videos
E-mail receiving and 14.3 15.7 13.3 14.5 15.2 13.2 14.4
sending
On line music 12.5 15.4 13.6 15.0 14.8 12.1 13.9
Video phone 12.1 14.3 13.9 14.9 15.3 12.2 13.8
Internal Email transmitting 12.6 15.0 13.6 14.0 14.1 12.1 13.6
Emergency location 13.5 13.9 12.3 12.5 14.3 14.1 13.4
Customer relationship 13.0 14.2 13.4 13.4 14.5 11.8 13.4
management
Online translation 11.9 14.5 13.2 13.5 14.2 11.0 13.1
Film on demand 12.5 13.7 12.1 13.4 15.1 11.4 13.1
Internal document sharing 11.8 14.3 12.6 13.5 13.6 11.4 12.9
Movie or TV foreshowing 11.2 14.4 12.2 13.4 14.2 10.9 12.8
Online virus killing 11.1 14.0 11.5 12.7 14.4 10.8 12.5
Video program ordering 11.0 13.6 12.3 13.1 13.7 10.2 12.4
Online interactive games 10.9 13.6 11.9 13.1 14.0 9.6 12.2
Online shopping 11.1 14.3 11.2 11.4 13.3 9.7 11.9
Mobile picture QQ 10.5 14.3 11.3 11.9 13.4 9.4 11.9
Internal training 10.5 13.1 11.4 11.8 13.0 10.0 11.7
Broadcasting 10.6 13.4 11.9 12.0 12.1 9.6 11.7
Navigation 11.9 13.0 10.7 9.8 12.1 10.8 11.4
Information ordering in 10.6 12.6 10.3 10.1 11.8 9.5 10.8
shopping center
Mobile phone stock 9.2 12.2 10.4 11.2 13.2 7.7 10.7
Instant monitoring of 10.3 12.4 10.4 9.7 11.8 9.2 10.7
posting goods
Remote medical treatment 9.0 10.5 10.0 11.8 8.8 10.0
Mobile phone lottery 7.4 11.9 9.9 10.9 12.0 7.0 9.9
Remote education 9.1 9.1 10.3 11.5 9.6 9.9
Table 2 The interest degree (%) of high-end users in VAS provided by future 3G network
© VAS CHINA Project [FP6-2004-IST-3-015774] 19
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Some changes of the requirements on mobile VAS can be found through the
comparison between the inquiries made in 2002 and in 2003. Dissimilar with
the inquiry result obtained in many foreign countries, in 2002 most of the
people in China were not interested in the services of messaging and mobile
entertainment such as game, video and so on. However, in 2003, video services
were accepted by most of the people.
3.2 Political Environment of Value-Added Services
The political environment influences also the development of the
telecommunications and the market of mobile VAS. In the following, we first
review the major activities related to the supervision and regulation on
telecommunications and then analyze their possible influences on the mobile
VAS market.
3.2.1 Supervision and Regulation on Telecommunications
From the beginning of the 1990’s, a series of definitions concerning VAS have
been given and policies regarding the supervision and regulation of the Chinese
national telecommunication market have been put forward. The major points
are summarized as follows.
• In December 1993, the State Council authorized the construction of China
Unicom Corporation Limited, and defined the concept of basic
telecommunication services and value-added services for the first time.
• According to the “Telecommunication Regulation of the People’s Republic
of China” issued by the State Council in September 2000, VAS includes 9
services: E-mail, voice mail box, online information storing and searching,
electronic data exchange, online data and trade processing, value-added fax,
Internet access services, Internet information services, video conferencing .
• On June 11th, 2001, the Ministry of Information Industry (MII) made a
declaration to classify the VAS into five categories, which are VAS in the
fixed telephone networks, VAS in the mobile telephone networks, VAS in
satellite networks, Internet VAS, and VAS in the other data networks.
• According to the “Catalog of Telecommunication Services” defined and
implemented by MII since April 1st, 2003, the telecommunication VAS will
be classified according to the characteristics of the services instead of
network features. Namely the services that can be implemented on different
networks but do not have much essential difference are combined.
Furthermore, considering the factors such as the degree to which the VAS
may influence the telecommunication market, the VAS may be also divided
into two categories. One is the services that can affect the
telecommunication market greatly. These services have aptitude requirement
on the service operators. This kind of services includes mainly online data
and trade processing, domestic multi-party communication services,
domestic Internet VPN services, Internet data center services. The other
category of services has relative less impact on the market, and do not
© VAS CHINA Project [FP6-2004-IST-3-015774 20
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require the operators to have special aptitude. This kind of services includes
mainly the store and forwarding services, call center services, Internet access
services and information services.
• On December 8, 2003, the Committee of the Internet News and
Information Service of the Chinese Internet Association was founded. The
people from more than 30 Internet news and information services
companies, such as People’s Net, Xinhua Net, China Net, Sina, Sohu and
Wangyi etc. signed together the “Common Agreement of Internet News
and Information Services”. With the agreement these companies promised
to accept the government administration and public supervision.
• Depending on the “Reference Process for Telecommunication Opening”
signed when China joined the WTO, the stock of value-added
telecommunication services hold by the foreign capitalists may not exceed
fifty percent (50%). At the same time, China will cancel the region
restriction of value-added services completely. The opening range of mobile
voice and data services will expand to fourteen cities. Foreign capital may
reach 49% in a joint-venture company.
• On February 10, 2004, Jiang Yaoping, the director of the department of
Policy and Regulations of MII, said during the meeting of “Information
exchange about the development of telecommunications and the
corresponding policies”, that the draft of Telecommunication Law has been
sent to the related organizations and enterprises for comments.
• In the middle of June 2004, MII issues a “Notification about the
standardization of SMS market”. The notification deals with problems in the
SMS market, such as the opaqueness of SMS charging, charging for non-
ordered SMS, complains cannot be solved in time and so on, aiming at
standardizing the SMS market, and protecting the legal rights of the users.
• In late June 2004, MII defined the year 2004 as the Telecommunication
Service year. MII tries to standardize the telecommunication service
protocols, and to insure the rights and responsibilities of the formatted
contracts. MII requires that the telecommunication enterprises should ask
the opinions from the customers, specialists on law, and the related
administrative organizations when they issue the telecommunication service
protocols. The telecommunication enterprises should provide services to the
customers according to the service contracts. When conflicts occur, the
telecommunication supervision organization will solve the conflicts
according to the service contracts.
3.2.2 Effects of Policies on Mobile VAS
The Chinese government has made a lot of efforts on the standardization of
VAS and VAS market. From the above activities on the supervision and
regulation of VAS, following conclusions can be made:
• The amount of the operating entities for VAS increases continuously, and
the market competition becomes much stronger.
The threshold for permitting a VAS to enter the telecommunication market
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becomes lower, and more third parties participate in the running of a VAS.
More and more foreign companies, as well as companies from Hong Kong
and Macau are entering the VAS market actively. This is helpful for breaking
the monopoly and improving service quality. However, this may also result in
illness competition and finally have negative effect on the VAS development.
• The competition activities are expected to become standard, and the
capabilities for service creation will increase.
Currently the competition in the VAS market focuses on only some small
service area. In case no mature regulations, laws as well as policies exist, the
competition may simply go through low prices. This results in some illegal
and short sighted activities which are not beneficial to the long term healthy
and sustainable development of VAS market. Under the political regulation
and supervision, the service providers may concentrate more on the user
requirements instead of illness competition.
• The rational participation of foreign capital may stimulate the development
of the Chinese VAS market.
On the one hand, the customers will benefit from the introduction of
foreign capital into the Chinese market. For example, the irrational price for
some services will decrease, and more types of VAS can be provided. On the
other hand, some advanced theories and technologies can be provided to
the Chinese service providers through cooperation. This may stimulate the
development of VAS and VAS market.
3.3 Technical Environment of Value-Added Services
In the recent years, computer, Internet and IP technology developed very fast in
the world and in China. This provides a strong technical support for the
development of VAS. With the pervasion of IP technology in elecommunication
networks, the application of soft switch technology and the evolution to 3G,
the telecommunication networks in China will have greater capability for
supporting various VAS.
3.3.1 The Influence of IP
With the transfer of telecommunication services from voice service to data
service, all kinds of the traditional telecommunication networks carrying the
services, such as the access networks, transmission networks, and signaling
networks and so on, also change to a single carrier network system based on
connectionless IP technology.
This change strengthens the capability of the networks. The networks become
more flexible, and at the same time possess also high stability, reliability and are
easy to manage. Not only the current quality of services can be guaranteed, but
also an open system architecture can be provided, which allows rapid
deployment of new VAS and provides services to third parties. The evelopment
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of IP technology provides plenteous network resources for value-added
services.
3.3.2 The Influence of Soft Switch Technology
Soft switch technology is a kind of new technology based on IP phone, and is
deemed as one of the key technologies for NGN. In a soft switch system, in
order to be able to introduce new or value-added services, the call control
function provided by the soft switch technology should be the basic or atomic
call control function required by all kinds of services for the purpose of
convenient introduction all kinds of new services and value-added services.
The ISC application workgroup has put forward an architecture for providing
value-added services in the next generation packet-based voice network. Fig. 3
illustrates this architecture.
API: application program interface API
SIP: session initiation protocol App Server
RTP: real time transmission protocol Media Server
SIP
BICC: bearing independent call control SIP
RTP
BCP: bearing control protocol
Soft switch Soft switch
BICC/SIP-T
RTP
Signaling Media gateway Media gateway Signaling
gateway gateway
Figure 3 The architecture for providing VAS in the next generation packet-based voice network
The greatest advantage of soft switch based NGN is that it can introduce some
exciting new value-added services rapidly and economically during the
provisioning of the normal services. Soft switch only provides some basic and
supplementary services, whereas processing the value-added services has been
moved out from the soft switch. Application server can provide the
environments for deploying VAS rapidly and economically, and various kinds of
programming interfaces (API), such as JTAPI, JAIN, Parlay, CPL, CGI, Servlet and
so on. These interfaces are open and flexible, and enable establishing,
managing and deploying new services without updating or renovating soft
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switch equipments. This can reduce the cycle and expenses for deploying the
new services.
3.3.3 The Influence of 3G Technology
Being able to provide various mobile multimedia services is one important
feature of 3G mobile network systems. The technical breakthrough may
stimulate greatly the development of mobile VAS in China, and following
services become possible.
Mobile location based services
Many location orientated services can be provided, such as navigation,
measurement, first aiding, vehicle scheduling, guarding against theft and
robbing, city planning, tourist guidance and so on. Since the data transmission
rate increases greatly in a 3G system, the location based services will play an
important role in 3G networks.
Video telephony and video conference
Video telephone will become more and more popular in 3G networks, where
the network bandwidth can be guaranteed. Especially with the development of
coding technique and the introduction of IP technique, the cost of the network
operators for video telephony based on IP can decrease. This may promote the
popularization of video telephony and video conference services.
Mobile business
Mobile business is another hotspot of VAS in 3G networks. Users can obtain,
process and send information at anytime and everywhere. The trading based
on the closed mobile networks may be more safe and reliable than that based
on the open Internet system. Mobile business uses the mobile network
operators with good reputation as the medium; this solves the reputation crisis
problem in the current Internet. Moreover, it is allowed to use multiple ways
such as voice, SMS, WAP for trading, and the mobile business becomes more
convenient and flexible. Hence, mobile business is a launch point for the
development of E-business, and the 3G networks provide a platform for the
mobile business.
3.3.4 The Influence of Terminal Technology
The development of different kinds of terminals provides conditions and
possibilities for enriching value-added services. Especially the improvement in
encapsulation, displaying, and CPU processing speed etc., has made it possible
for enjoying VAS using mobile multimedia terminals.
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3.4 Conclusion
In general, China possesses a suitable environment for the development of
mobile VAS. The continuous increase in economic in China provides a necessary
precondition for the development of mobile VAS. A large amount of potential
users and requirement on diverse mobile VAS can be expected. In addition, the
telecommunication laws and regulations in China can guarantee also the
normal operation of mobile VAS and the rational market competition.
Furthermore, the technical progress in China provides the basis and possibility
for the introduction of mobile VAS. The network infrastructure and platform
needed by various mobile VAS can be realized and provided.
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4 Mobile VAS Value Chain
The value chain for value-added services consists of
• content providers (CPs),
• service providers (SPs),
• device manufacturers,
• mobile operators,
• infrastructure providers,
• end users, i.e. customers
• Ministry of Information Industry.
Strictly seen, MII is not a part of the value chain. However, in China, MII plays a
very important role in the whole information industry and influences each
entity in the VAS value chain heavily through stipulating regulations and laws.
On the one hand, MII ensures the fair developing environment for the value
chain. On the other hand, each entity in the value chain should abide the
regulations stipulated by MII.
They choose standards and technologies used in networks, e.g. 3G (Third
Generation) standard, or alternatively may develop new standards when they
see that it is good for Chinese economy. In particular, MII provides the
regulations to get a mobile VAS License. They also control the domestic VAS
economy through these fixed-term licenses. For local services (e.g. City of
Shanghai) it is necessary to get the license from the local telecoms
administration.
Equipment manufacturers are in a key role to bring new technologies on board.
They initiate trials for new services together with operators and sell terminals to
end users. Operators do not lock their SIM (Subscriber Identity Module) cards to
mobile phones and consumers are free to choose any phone they desire.
Current market shares for terminal manufacturers are Nokia (15,5 %), Bird (11
%), Motorola (10,8 %) and Samsung on the fourth place.
Operators provide voice and data services, portals and micro payment
mechanisms for VAS. They control content and services provided by the service
providers, according to MII and government regulations. e.g. prevent the
distribution of ”harmful” and ”politically incorrect” information including
erotic content. They also have a strong role in initiating trials and inviting SPs to
join into providing new services. It seems that operators are interested to have
a greater role in service providing. The mobile operator market is divided
between two companies, China Unicom (40%) and China Mobile (60%).
China Unicom is focusing on CDMA technologies and offers a service platform
based on BREW from Qualcomm. Their revenue sharing model is 80% for the
SP and 20% for the operator
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China Mobile is using GSM (Global System for Mobile Communications)
technology and offers the Monternet portal based on a Java platform from
Motorola. China Mobile is commanding 85% for the SP and 15% for the
operator.
The role of service providers is to provide content for operators. They are strictly
controlled to comply with MII regulations and need licenses to operate. Market
share figures for SPs is difficult to come by, but Sina, Sohu, Tencent and Tom
Online are major players. Currently, more than 70% of the service providers
operate on loss. Third party content providers are quite rare at the moment, as
service providers and operators provide their own content. Some big global
companies such as Sony Music, Disney and AOL are providing content for the
Chinese market.
The figure below describes business actors and their interaction in mobile
service arena.
Figure 4 VAS value chain members and relationships
Revenue sharing models are due to change in the future as operators are going
to provide marketing on behalf of SPs. They might also be trying to diminish
the role of SPs by locking content into their own service mechanisms.
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The following diagrams compare the Japanese I-Mode from Docomo to China
Mobile’s Monternet offering.
Figure 5 I-Mode value chain
Figure 6 Monternet value chain
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The above figure 4 indicates that:
• The mobile network operators are the core in the value chain
• Equipment manufacturers and Integrators are the upriver participants in the
value chain. They provide the network environment together with the
operators.
• CP→SP→Operator→End User is the value fulfillment process.
• Network operators, SPs and terminal manufacturers are facing end users
directly.
• Customization of the terminals is an emerging tendency. Hence, there exists
links among terminal providers, network operators and end users.
Generally speaking, the efficient cooperation between various participants is
the key factor to form a healthy value chain. Moreover, the cooperation and
competition coexist between the participants of the value chain. In the
following, we will analyze the entities in the value chain in detail.
4.1 Mobile Network Operators
Under the current Chinese circumstances, the mobile network operators, as an
entity in the value chain, have the following features.
Operators are cores in the value chain
On the one hand, operators possess network infrastructure and large customer
resources. On the other hand, SPs can only provide services to end users
through the network infrastructures owned by the operators. These two facts
make the mobile network operators have absolute advantages in the value
chain. However, this means also that the operators must be responsible for
maintaining a good and healthy value chain.
Operators have taken actions to enhance the management for SPs
For the first several years when VAS began to develop, SPs have developed
rapidly. Both the number of SPs and the services they provide increase very fast.
However, the management from the mobile operators is relatively mild at this
period. Driven by profits, some SPs have taken some actions violating the
regulations and even the law. As a result, the operators’ reputation was
affected too. Having noticed this phenomenon and to keep the value chain in
good condition, MII, together with China Mobile and China Unicom, began to
take measures to supervise SPs severely.
The relationship between mobile operators and SPs have changed from
cooperation to cooperation and competition
In the early phase of VAS development, mobile operators encouraged SPs
eagerly to develop VAS for the consideration of profit and market share.
Operators and SPs cooperated happily with each other. Operators charge for
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network flow fee, while SPs for service fee. Gradually, the operators realized
that SPs have more profit space. They are not satisfied with the profit sharing
mode anymore. Therefore mobile operators begin to act in SP’s role
themselves. For example, China Mobile has set up a corporation called
“ZHUOWANG”, which is an SP actually. Thus, operators and SPs become
competitors. However, we should note that operators can not do everything.
SPs will not be died out. Therefore, in the future the cooperation and
competition between SPs and operators will coexist.
The cooperation between operators and equipment manufacturers and
terminal manufacturers will be even tighter
The development of VAS depends on perfect network environment and
terminals to some degree. Especially in the 3G mobile network environment,
mobile network operators and equipment as well as terminal manufacturers
will be bound together. On the one hand, operators can feed back information
to the equipment manufacturers and terminal manufacturers. On the other
hand, facility and terminal manufactures should provide new technology and
possible VAS in time to operators. In a word, they should communicate
sufficiently and contribute to value chain together.
Operators begin to pay attention to enterprise applications
Having some success and experiences in developing VAS for individual
applications, China Mobile and China Unicom have both realized the
importance for cooperating with enterprises. They both begin to develop VAS
for enterprise applications.
With the development of the communication industry and market, China
communication industry was reformed and reconstructed at the beginning of
2000. As a result, China Mobile was split from the former China
Telecommunication, and the former China Telecommunication (China Telecom)
was reconstructed to the current China Telecommunication and China
NetCommunication (China Netcom). On July 1994, the United
Telecommunications Corporation (China Unicom) was established. Together
with China Satellite Communication Corporation and China Railway
Communication Corporation, now they represent the major network operators
in China. Since China Mobile concentrates its business on mobile
communications, and China Unicom has a big competition capability in both
the mobile and fixed network market, in the following we introduce China
Mobile and China Unicom in detail.
4.1.1 China Mobile Communications Corporation
China Mobile Communications Corporation (China Mobile or CMCC for short)
(http://www.chinamobile.com/) was officially founded on April 20th, 2000 and
is directly under the leadership of the central government. It is a key state-
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owned enterprise focusing on mobile business, and is now the largest mobile
network operator in China.
CMCC has a registered capital of 51.8 billion RMB Yuan, assets of over 320
billion RMB Yuan and 120,800 employees. It has wholly-owned subsidiaries in
10 provinces/autonomous regions in China and fully holds the equity of China
Mobile (HK) Group Limited. China Mobile (HK) Limited, of which China Mobile
(HK) Group Limited is the major shareholder, has established wholly-owned
subsidiaries in 21 provinces/autonomous regions and municipalities directly
under the central government in China and went public in HK and New York
Stock Exchanges.
CMCC is the only network operators focusing on the development of mobile
communications. It plays a dominant role in the development of Chinese
mobile communication, and has an important position in the international
mobile communication area. After the construction and development of more
than 10 years, CMCC has established a comprehensive communication
network with wide coverage, high communication quality, various service types
and high level services. The network scale and the customer number are in the
first position in the world. Till the end of 2002, the network has covered most
of the cities and regions in China. All the main traffic lines have been covered,
and indoor coverage has been realized in the major areas of cities. The GSM
exchange capacity has reached 182 million, and the total user number is over
138 million. Roaming service has been realized.
CMCC deals mainly in mobile voice, data, IP telephone and multimedia service.
It has also the right to operate Internet services and possesses the international
gateways. Beside the basic voice services, it provides multiple value-added
services such as fax, data, IP telephone etc. CMCC has succeeded in shaping
nation-wide famous brands like "GoTone", "Shenzhouxing" and "M-Zone".
"GoTone" has gained a massive occupying ratio among the high-value
customers for the superior value of service, while innovative brands like "M-
Zone" are welcome in the Fun-Love-Youth group. The network access numbers
of CMCC are 139, 138, 137, 136 and 135.
Being a large enterprise, the organization of CMCC is depicted in fig. 7.
Among those departments, the Data Service Department is responsible for the
operation and development of the value added services. Fig. 8 shows the
architecture of the data service department. As indicated by the name, the
Service Operating Department is in charge of introducing, managing and
coordinating value-added services. Especially, the Cooperation and
Management Group as well as the Portal Operating Group have close
relationship with SPs. The former is responsible for the cooperation and
management of the SPs, the evaluation of services of the “DreamNet”, as well
as the service, customer and product supporting, VAS market etc. And the
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latter organizes and manages portals, new services, as well as supervises the
quality of the services, integrates and optimizes the services.
Figure 7 Departments of CMCC
Currently, value-added voice services like "E-tone On-line" saw positive results
at trial spots. Data services maintained a robust growth momentum,
accounting for 6.3% in total sales revenue, an increase of 4.1 percent points
over last year. The SMS traffic hit 79.3 billion transactions throughout the year
(2004), 8.45 times that of last year. The International SMS has commenced and
the initiative launch of MMS service promoted and enriched the application of
GPRS. The data-bundled services targeting at young people, businessmen and
group clients have been widely recognized and welcomed.
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Data Service Dept.
New Product Center Service Operating Sale Planning Group Customer
Dept. Dept. Dept.
Service Management Cooperation Portal Operating Terminal
Group Management Group. Group Cooperating Group
Figure 8 Organization of the CMCC data service department
4.1.2 China United Telecommunications Corporation
China United Telecommunications Corporation (China Unicom or CU for short)
(http://www.chinaunicom.com.cn/chinaunicom/) was established on July 19,
1994. The birth of China Unicom brought competition into China's
telecommunication market and has been instrumental to the reform and
development of the country's telecom industry.
Unlike China Mobile, China Unicom not only concentrates on mobile services,
but also possesses fixed network and services. Nevertheless, it is the second
largest mobile network operator in China. On May 10, 2004, China Unicom
announced that the total number of its GSM and CDMA subscribers exceeded
100 million, and thus it became the world's 3rd largest GSM operator and the
2nd largest CDMA operator.
Fig.9 illustrates the organization of China Unicom. Dissimilar with China
Mobile, where VAS administratively belongs to the data service, China Unicom
has a separate VAS department, that is responsible for all things related to
value-added services, such as the development of data network, Internet and E-
business, the development of VAS market, sale planning etc. The VAS
Department is also responsible for the management of SPs. It constitutes rules
for the cooperation with SPs, improving and adjusting the cooperation mode
with SPs. SPs must hand in service applications, and the applications must be
approved by the VAS Department before the services can be operated in the
networks.
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So far China Unicom has cooperations with a lot of SPs and has already
provided a large amount of VAS to users, such as Prepaid Call, Mobile VoIP,
Voice SMS, Super SMS, Unicom Secretary, Mobile Pager, Mobile Stock Trading,
Mobile Banking, etc. Its wireless Internet service brand "Uni-Info" provides a
wide range of wireless VAS such as hot news, weather forecast, stock info,
foreign exchange rates, railway schedule and flight schedule. Multiple access
modes are available under "Uni-Info". Mobile phone users can not only get on-
demand service and customize service, but also access the Internet where
shopping, entertainment, sports, video and financial info are available.
Moreover, China Unicom keeps introducing new features such as "10158
Voice SMS", which gives users not used to writing short messages an
alternative of saying and hearing short messages. Leveraging its integrated
service capability China Unicom enables mobile subscribers to receive and send
Emails via their mobile phones without accessing the Internet. This is achieved
by linking mobile phone numbers to Email boxes. The company's new "OTA-
STK" service further satisfies SMS application demands among its users.
DIRECTORATE BOARD OF SUPERVISORS
PRESIDENT
VICE PRESIDENT
GENERAL BUSINESS PLANNING MOBILE TELECOMMUNICATION DATA & IMMOBILITY CUCC
AFFAIRS DEPT. DEVELOPMENT DEPT. FINANCE DEPT. SERVICE DEPT. TELECOMMUNICATION SERVICE DEPT. COLLEGE
HUMAN BUSINESS & GROUP COSTOMER VAS INFRASTRUCTURE CHARGE, SETTLEMENT &
RESOURCES DEPT. MARKETING DEPT. CUSTOMER DEPT. SERVICE DEPT. DEPT NETWORK DEPT. INFORMATION SYSTEM DEPT.
TECHNOLOGY DEPT./CUCC RUN SUPERVISING INTERCONNECTION AUDIT PARTY & THE MASSES SUPERVISING LABOR
RESEARCH ACADEME DEPT. DEPT. DEPT. WORKING DEPT. OFFICE UNION
EACH BRANCH EACH SUBSIDIARY
COMPANY COMPANY
Figure 9 Organization of China Unicom
4.2 Service Providers and Content Providers
With the development of technologies and the increase of market demands,
the service and content providers (SPs/CPs) play a more and more important
role in the telecommunication industry. They have become a separate entity in
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the telecommunication industry chain. In general, SPs or CPs belonging to the
basic telecommunication operators have much more convenience than other
SPs/CPs. They have advantages in the VAS market competition and can get the
high-end users in the user group, such as the InterStar of China Telecom,
JiuZhou Online/Everyday Online of China Netcom, Monternet of China Mobile
and Unicom Online of China Unicom. Whereas other SPs/CPs can only obtain
the markets given up by the SPs/CPs belonging to the basic network operators.
The following sections describe the features of SPs and CPs currently in the VAS
value chain in China.
SPs are under strict supervision
Compared with the earlier phase for VAS development, nowadays, SPs are
under severe supervision. SPs are punished for several reasons, such as
disobeying the regulations, providing unhealthy information, vague charges,
setting SMS traps etc. In addition, the admittance threshold is heightened.
SPs will face new challenges from the market
The market and regulation environments for SPs are changing quickly. Some
small SPs will be washed out of the market or bought by big ones; some SPs
will become CPs. Providing inimitable services becomes more and more
important for SPs to survive in the market competition..
CPs may play a more and more important role in the value chain in
future.
So far, one of the biggest problems of the value chain is the lack of CPs. In the
current VAS market, SPs play both APs' and CPs' roles actually, i.e., SPs develop
and provide both application services and content services by themselves. CPs
belong to SPs and have lost their positions in the value chain. As the
development of content becomes harder and harder CPs will play a more and
more important role in the value chain in the near future.
In the following, we introduce some SPs/CPs that have a relatively great
competition capability in today’s mobile VAS market in China.
4.2.1 SINA Corporation
SINA Corporation (NASDAQ: SINA)
(http://corp.sina.com.cn/eng/sina_intr_eng.htm and
http://corp.sina.com.cn/eng/sina_prod_4_eng.htm) is one of the leading online
media company and value-added information service (VAS) providers for China
and Chinese communities worldwide and has more than one hundred million
registered users. With the most recognized Internet brand in China, SINA has
established a network of localized Web sites that target China and overseas
Chinese communities.
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The company has close to 2,000 employees in its offices in six cities throughout
Asia and the U.S. and maintains a network of four localized Web sites. On
December 31, 2004 SINA generated annual net revenue of $200.0 million.
SINA.com is an online media and entertainment service provider. SINA.com is
committed to becoming an all-in-one online community for the global Chinese
population. As the leading Internet brand name in China and global Chinese
communities, SINA.com offers a full range of comprehensive and on time
Chinese-language content, multi-functional and easy-to-use web space and
cutting-edge ways of enabling free and easy communications worldwide. By
cooperating with about 600 content providers, SINA operates over 30 channels
on its localized websites across China. SINA.com's all-round and timing news
coverage includes breaking news, sports and games, entertainment and
fashion, and financial and IT information.
SINA generates revenues from five major business lines: SINA.com (online news
and content), SINA Mobile (mobile value-added services), SINA Online
(community-based services and games), SINA.net (search and enterprise
services) and SINA E-Commerce (online shopping and travel). Together these
units provide an array of services, which include regionally focused online
portals, mobile value-added services, search and directory, interest-based and
community-building channels, free and premium email, online games, virtual
ISP, classified listings, fee-based services, e-commerce, and enterprise e-
solutions.
SINA Mobile
SINA Mobile emerged in early 2002 as another major business line of SINA by
integrating the advantageous resources of the former SINA Wireless,
Memestar, Crillion and StarVi. As a leading mobile VAS provider in China, SINA
Mobile provides over various platforms services including SMS, MMS, Coloring
Ringing Tone (CRT), IVR, WAP and KJAVA/BREW. Its products range from
subscription to dating, gaming and download. The contents are provided by
famous brands such as Time Warner, BANDAI, HELLO KITTY and WALKGAME.
SINA mobile's partners include the major domestic telecommunication
operators, such as China Mobile, China Unicom, China Telecom and China
Netcom. With SINA's deep experience in product planning and development,
sales, marketing and partnership, the newly remolded SINA Mobile tracks
closely the development of the mobile VAS industry in China and provides
Chinese mobile phone users with the best value-added content service.
SMS
Products of SINA SMS are divided amongst subscription, dating, games,
downloads and Internet SMS. The flagships are Splendid Downloads, Friends
and Headline News. As the leader of mobile VAS SP in China, SINA SMS builds
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upon its strong content resources, as well as partnerships with numerous CPs
both home and abroad, to offer the most exciting SMS services to users.
MMS
In addition to various MMS products, SINA MMS boasts the largest MMS
downloading library in China. The downloading library offers exclusive products
including the cartoons of Hello Kitty, Kitten Dream, PUCCA, Zhu Deyong and
Jimmy, as well as photos and voices of celebrities such as A-Mei, Ren Hsien Chi,
Chow Wah Kin, Yu Quan, Zhang Ziyi. There are over 20 customized services
ranging from news to entertainment.
CRT (Coloring Ringing Tone)
SINA CRT is composed of three parts: songs, funny dialogues and special
sounds. For the songs, SINA has obtained copyrights from big music houses
such as Warner International, Zhushufang Culture, Star Factory, Kirin Kid,
providing access to downloading pop stars' songs. Funny dialogues are popular
for its Northeast Dialect and Sichuan Dialect series and Stephen Chow's
recognized dubbing voice by Shi Banyu.
IVR
SINA Mobile provides two kinds of IVR services, Voice Message Interactive and
Entertainment Voice Online. Centering on voice content service, SINA IVR
provides mobile phone users with a voice information VAS platform integrating
voice and SMS. Based on users' demand, SINA IVR sets up a three-tier product
system, offering content that includes chatting and dating, news information,
interactive games, etc. Products already introduced to the market include
Entertainment Scenery, Love Bible, SINA News, Binfen Blessing Zone, etc.
WAP
SINA WAP offers a full range of information services on its wireless terminal
platform with sophisticated design and plan in user experience, product
classification and interactive feedback. Based on the design of China Mobile's
Monternet services SINA WAP provides compatible products and services in
Graphics & Ringing Tones, Chatting & Dating, Fashion & Life, Games &
Entertainment, etc.
KJAVA/BREW
The spread of smartphones in China has enabled the development of
KJAVA/BREW technologies. SINA's KJAVA/BREW platform offers SINA Netizens
with improved users experience in products such as combat games, puzzles,
sports games, poker and chess games. Currently, SINA's K-Java game products
are an important part of China Mobile's K-Java mobile product line. SINA's
KJAVA/BREW platform also offers products in foreign language tips, Karaoke,
entertainment and cartoons.
© VAS CHINA Project [FP6-2004-IST-3-015774] 37
- 38. Summary Report
4.2.2 SOHU Corporation
SOHU.COM (NASDAQ: SOHU)
(http://www.sohu.com/about/English/aboutsohu.htm and
http://www.sohu.com/about/English/proandser.htm) is one of the China's
premier online brand and indispensable to the daily life of millions of Chinese
who use the portal network for their news, search, e-mail, wireless messaging,
instant messaging, browsing, games and shopping. SOHU has built one of the
most comprehensive matrixes of web properties in China, consisting of the
mass portal and leading online media destination www.sohu.com; the No.1
online alumni club www.chinaren.com; No.1 games portal www.17173.com;
top real estate website www.focus.cn and wireless value-added services
provider www.goodfeel.com.cn. This network of web properties offers the vast
SOHU user community the broadest possible choices regarding information,
entertainment, communication and commerce. SOHU.com, established by Dr.
Charles Zhang, one of China's Internet pioneers, is in its eighth year of
operation. SOHU.COM has been listed on the NASDAQ national market since
July 2000 under the ticker symbol SOHU.
SOHU products & services
Through its pioneering roll-out of wireless services since 2000, SOHU has
become a frontrunner in making the Internet ubiquitously available, whether in
the office, at home or on the road. Via SOHU wireless messaging services
subscribers can receive the latest news, download logos and ringing tones,
access their email account, stay in touch with friends and fellow alumni, get
dates, play games, or sign up for a host of other information, entertainment
and communication applications that have made the mobile phone an essential
tool in young people's daily lifestyle. SOHU offers mobile services on SMS (short
messaging services), MMS (Multi-media Messaging Services), WAP (Wireless
Application Protocol), K-Java based platforms and IVR (Interactive Voice
Response).
In May 2004 SOHU acquired Beijing G. Feel Technology Co., Ltd. (‘Goodfeel'), a
leading Chinese provider of value-added mobile data services for Wireless
Applications Protocol (WAP) . WAP is a rapidly growing area in the Chinese
wireless data market. Goodfeel, a Beijing-based WAP service provider, offers
WAP services via CMCC throughout China. CMCC allows subscribers Internet
browsing on their mobile phones through a quick and convenient ‘One Key
Access' Monternet platform. Goodfeel is one of the leading WAP service
providers to CMCC, with its main product being ringing tone and picture logos.
Goodfeel enjoys preferential menu placement positioning on this Monternet
platform, a key competitive advantage relative to other service providers. In a
joint branding promotional campaign in May 2003, SOHU.COM teamed up
with CMCC and Motorola Inc. to jointly introduce short messaging and
multimedia messaging services at the Mount Everest, where some twenty
international teams had gathered to commemorate the first human conquest
of the world's highest mountain half a century ago.
© VAS CHINA Project [FP6-2004-IST-3-015774 38