Wednesday, December 06, 2006

3G, the second round for service providers to grow

Hong Kong has its honor to hold the ITU Telecom World 2006 from December 4 to December 8, the first ever city outside of Switzerland to hold such an event.

The event is so big to even affect the telecom stock in Hong Kong. When China Telecom president Leng Rongquan said China will launch the 3G service soon, the company's stock increased by 15 percent that day. Market is always driven by breaking news, while however, not many people think it in a long-term way.

From my telecom experience, the creative business model usually doesn't come from the telecom operator side. Say, the model of SP, or service providers, only followed after thousands of small private companies which support the China Mobile and China Unicom. Telecom operators, whose main character is monopoly, are hard in trying new and effective model because of its own big strucuture. So the smart way is to give a piece of pie to private companies, and thus, benefit themselves.

So to me, 3G is more like the opportunity for second round of growth for service providers. In the first round, companies such as, and benefited most, while in the second round, the most creative one may be from some new one.

Among them, media conglomarates such as CCTV and Shanghai Media Group are likely to benefit. The two already competed hardly on the launching of IPTV, a way for people to watch TV via handy or order programmes freely. With 3G, they will have a better platform which are faster.

However, to them, the problem is still their character. As state-owned companies for a long time, it is a question if they could response quickly as small private ones and if they have any advantages beyond their monopoly character.

Saying so, monopoly usually win at last, though not the full pie, 80 percent is pretty enough.

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