CHINA Mobile is more than just the 800-pound gorilla in the cellular service market.

With over 415 million subscribers and US$15 billion in annual profits, it is approaching AT&T's status as the mother of all Bells in its hey day.

The combined subscription base of China Mobile's two closest competitors, China Unicom and China Telecom, is a paltry 173 million.

Today, China Mobile is arguably the largest, the most profitable and the most successful wireless carrier among major telecom service providers in the world.

While it is not surprising that in the telecom business dominant incumbent carriers continue to strengthen their position, the scale of and the speed at which China Mobile has surged in the marketplace is appalling, raising cautionary anti-competitive concerns among the country's regulatory officials.

In the US, the recipe for dealing with a monstrous AT&T was to break it up. In 1974, the US government waged a marathon anti-trust lawsuit against AT&T, which resulted in its eventual voluntary divestiture eight years later. This resulted in a new AT&T that specialized in long distance telephone service and seven regional Bell operating companies in local telephone business.

In China, instead of breaking up the Goliath, you try to weaken it. So far, the Ministry of Industry and Information Technology (MIIT), the industry's regulatory body, has proposed four measures to reduce China Mobile's dominance, using what is called "asymmetric regulation."

The first measure is a Robin Hoodish cash transfer from China Mobile.

As part of the telecom industry restructuring, China Unicom's CDMA network and subscription base of 43 million were sold to China Telecom for 50 billion yuan (US$7.3 billion).

But the cash-short China Telecom need not pay.

The MIIT simply ordered China Mobile to foot the bill, which is roughly its half-year's operating profit.

The second measure is called one-way number portability. When a subscriber of China Mobile switches to China Unicom or China Telecom, he or she can keep the old telephone number and take it to the new carrier. But not the other way around.

The third measure is called on-way roaming. China Mobile provides almost ubiquitous coverage in most metropolitan areas (although the signal reception at my residence in Beijing is terrible!).

To extend the coverage for customers of the two latter carriers, China Mobile is ordered by the MIIT to provide roaming service for these users, but not the other way around.

The last measure concerns joint sharing of cellular tower facilities. Since China Mobile owns most of the infrastructure, the other two carriers stand to benefit from the joint sharing.

Better service

In the end, I doubt these measures will make much of a dent in China Mobile's continued momentum, as its success is largely built on its streamlined operations and marketing prowess.

Number portability is proved to have a placebo effect after being tried many years in the US. One-way roaming merely levels the playing field for the two carriers in terms of network coverage.

In the end, what counts are voice quality, customer service and quick introduction of new features and value-added services.

China Mobile does a masterful job on all these fronts that leave much to be learned by China Unicom and China Telecom.

To catch up with China Mobile, China Unicom and China Telecom need to provide better service and make product innovations, instead of relying on government handouts.

These asymmetric regulatory measures may help in the short run, but in the long run the market only believes in competitive advantages.

Source:shanghaidaily