China's CCID Consulting has reported that in Q3 2008, China's mobile value-added services maintained rapid development. The Olympic Games brought about more telecom services, but without benefiting carriers significantly. After years of rapid development, China's mobile value-added services industry needs a breakthrough to support its development in the future.

China Mobile Still Leads VAS Market

China Mobile has the absolute dominant position in value-added services, which accounts for over 80% of the total market. Telecom reorganization has little impact on China Mobile, so China Mobile continues to have sound strategy in value-added services, and its traffic have been growing rapidly. The number of China Unicom CDMA network users have declined slightly, which also affects its value-added services.

Value-Added Services Do Not Guarantee High Returns

Short message and wireless music products such as color ring have been driving the development of mobile value-added services over the past few years. Users have become accustomed to these services which have been generally well- received. China Mobile's report in Q3 2008 shows that by the end of Sept. 2008, the expected China Mobile's users will reach 436 million, with 414 million of them also users of value-added services, and 119 million of them would have experienced MMS and 346 million wireless music services. These data show China Mobile's commitment in developing its mobile value-added services through its brand name, while on the other hand, it also reflects that the portion of mainstream business in contributing to the market's sustainable development weakens. Generally speaking, the whole mobile value-added services' income in 208Q3 is just equal to the income in 2008Q2. The Olympic effect did not deliver huge revenues to carriers as expected.

Forecast on China's Mobile Value-Added Services in 2008Q4

In Oct., China Telecom officially took over China Unicom's CDMA network. Because of China Telecom's participation, the competition in China's mobile communications market is heating up. On one hand, value-added services are carriers' means of improving ARPU; on the other hand, carriers use value-added services to maintain existing clients and develop new clients. With China's telecom restructuring, CCID Consulting suggests that in 2008Q4 and the following quarters, carriers should look into the following issues in the development course of mobile value-added service.

Firstly, CCID Consulting urges operators to pay more attention to customized mobile phones and channel construction. Mobile Internet is an inevitable trend. The convergence of IT and CT will bring more diversified mobile value added services. Mobile phone manufacturers are already beginning to provide mobile phone applications such as mobile music of Apple and OVI platform of Nokia. Microsoft and other IT service providers also enter the mobile application field. For example, Microsoft releases a kind of Push Mail service named Raymail. And although operators do have advantages when developing mobile value added services, they are unlikely to dominate this market. CCID Consulting believes that operators should strengthen the development of customized mobile phone to improve new mobile services. Channel construction is another important factor for customized mobile phones. Operators make use of social channels in the form of national agent and capital & logistics platform to remedy defects of self-owned channels. Mobile phone manufacturers will share all of the social channels with operators. It is necessary for operators to improve control of social channels as operators cannot deliver enough benefits to social channels compared with mobile phone manufacturers. On the other hand, operators should coordinate the competition between self-owned channels and social channels to achieve a healthy development to enhance the popularization of new mobile services.

Secondly, operators need more innovative value added services. Service innovation has been a most important topic for operators. However, China's operators fail to find a break point. Push Mail, mobile payment, Fetion, and other new services have been launched without bring much profit to operators. Free content in Internet based on fixed network will be migrated to mobile Internet in the future, operators need to find a way of creating revenue. CCID Consulting suggests operators develop services that are stronger and more practical, such as customized healthcare and education solutions. Operators should enhance public resource development to support ICT service development. Also, operators can provide full service value added service to strengthen user loyalty.

Source:cellular-news