Tangled traffic, have to be TD

Recently, the semi-annual reports of the three major domestic telecom operators have been released. As one of the important highlights of the transformation of telecom operators, the change in the growth of mobile data traffic is one of them. Among them, China Mobile's mobile data traffic was 69.16 billion MB, a year-on-year increase of 59.3%; China Unicom's mobile data traffic reached 37.105 billion MB, a year-on-year increase of 489.1%, which is amazing; and China Telecom's 3G mobile Internet traffic in the first half of the year increased by about 12% on a compound month-on-month basis.

According to trend estimates, with the explosive growth of 3G user penetration exceeding the critical point and mobile Internet life gradually being widely accepted by users, the explosive growth of mobile data traffic will further intensify.

Tangled traffic

Originally, for telecom operators, in the context of mobile Internet, rapid growth in traffic is not a bad thing, but rather a sign of success in competition. But the current dilemma is that, under the impact of Internet companies, business innovation and traffic demand growth are much faster than the rate of improvement of telecom network capacity, and the previous scale advantage seems to have become a burden. Due to the large user base, China Mobile feels this particularly badly, so many people attribute this problem to the technicality of TD-SCDMA.

Of course, this reason is indeed part of the reason. At least it reflects that the network is still the basis for the survival of telecom operators. But the tangled traffic is only a market result, and the root cause is demand and competition. It’s just that the controllable model of "telecom operators provide, users choose to accept" in the past telecom business is becoming increasingly difficult to maintain, and the model of "market demand leads, operators follow and adjust" has begun to emerge, thus creating entanglement.

Possible attempts

At present, telecom operators still mainly use two means to solve the problem of traffic management: one is network upgrade; the other is cost transfer. In other words, one is a technical method and the other is a commercial method.

Network upgrades require a lot of investment, and if there is no corresponding profit model, the costs will be borne entirely by the telecom operators themselves. Therefore, telecom operators around the world have never given up trying to pass on costs.

Last December, European operators proposed to charge Google, Apple, Facebook and other companies for "smoother network" fees on the grounds that their networks were overloaded; in August this year, South Korea's three major mobile operators also met with mobile phone manufacturers to demand that smartphones that support mobile video applications be charged. Also in August, the Royal Dutch Telecom Group KPN raised its mobile Internet tariffs, and T-Mobile Netherlands, a subsidiary of Deutsche Telekom, also announced that it would stop providing unlimited mobile Internet tariffs.

However, from the perspective of domestic telecommunications industry competition, with the aggressive Internet companies and homogeneous telecommunications competition, telecommunications operators have little room to maneuver using commercial means to generate differentiated competitive advantages. Because, in the final analysis, commercial means can only become a sustainable profit model when there is a differentiated network foundation and the value created for the market is greater than the cost paid by users. Improving network capabilities is an unavoidable proposition.

TD

In terms of network upgrade, the scale of China Telecom's CDMA network users is relatively small, and its carrying capacity is relatively abundant. It has time to evolve the network according to its own characteristics, so it proposed "intelligent pipeline". China Unicom has obtained the WDMA license, excellent network performance, rich industry chain partners, and a large amount of mature operation experience that can be used for reference. If the income can support it, it will not be a problem to realize a high-quality network. In contrast, China Mobile's network construction and market coordination are not obvious, and there is a sense of strategic hesitation: it seems that it is always arguing, not knowing whether to build SCDMA or LTE, not knowing whether to be ruthless to give full play to the advantages of capital investment, or to save costs and ensure profits.

From the perspective of market competition, the market now needs a network that can carry large data traffic. China Unicom has already started to build a network, but China Mobile's 2G network seems to be overwhelmed. Even if the capacity keeps up, the download experience is increasingly difficult to meet the requirements. The large-scale commercial use of LTE, which was once highly anticipated, will take another three years. Can users wait? If LTE is too late, it means that either some users will be abandoned or the price will be reduced on a large scale to attract price-sensitive users. Moreover, if TD-SCDMA is not done well, who can guarantee that people will come to invest in TD-LTE as soon as it appears? China Mobile now only has TD-SCDMA available, and it is better to have something to use than nothing.

If we believe that it is better to take the initiative than to wait, and it is better to lose profits than to lose users, then China Mobile should make use of its own financial advantages to make up for the shortcomings of 3G.