China Telecom held seminar in Beijing on Oct. 24 to announce its CDMA network in operation. Meanwhile, China Unicom is working closely with China Netcom on the reshuffle. Industrial insiders say that in near future, China Telecom and China Unicom would have to consider the relationship between 3G and PHS when they are granted 3G licenses.
The future of the 80 million PHS users is to be noted.
PHS, A Product of Users’ Choice
PHS is called Xiao Lintong in China. Its first service was opened in Yuhang, Zhejiang Province in 1997. It holds close to 80million users countrywide.
How do you appraise the value of PHS existence? China’s PHS pioneer, Professor Fuxin Xu at Hangzhou Electronic Technology University pointed out that PHS is the only telecom service developed in China on grass-root demand. It was a success on market, technology and business strategy. He also emphasized that the value of PHS were shown from four aspects. First of all, PHS is an all-known brand and the brand value itself was enormous. Then, PHS is very cost-effective. The countrywide investment for PHS was around RMB80 billion, or around RBM100 billion including all supplementary investment, which cost much less than building a mobile network, while PHS is still keeping an annual income of RMB40 billion (RMB50 billion in peak years). Also, PHS is environment friendly, energy saving and subject to no location restriction in cell installation. Lastly, PHS reversed the profit-down situation that has puzzled fixed-line operators for over ten years. It found the new value of the left-unused resource and old equipment for fixed-line operators and realized the appreciation of state-owned assets. “From this perspective, the value of PHS lied with the fact that it saved an industry.”
Secretary General Peifang Yang of Telecom Economy Specialists Committee at the Ministry of Industry and Information Technology also admitted that PHS played an important role in over ten years in the past. He appraised PHS as a backbone technology, which was generated on request of China’s special need and suited the industrial environment.
Despite, after industrial restructure, all the three telecom operators will be allowed to run mobile network and the development of 3G is on the agenda. Two of them, who were PHS operators before, have stopped further investment in PHS. What will face PHS next and where is its future then?
According to Ms. Xiufang Hao, Deputy Engineer-General of Netcom Beijing, the PHS network covering Beijing is designed to hold up to 2.7 million users. It managed to provide service to around 2.5 million Beijing users in 2005 and 2006. But the statistics last month showed that the current users has dropped to 0.7 million. Ms. Hao insisted that invested asset should be protected; PHS has room to be further developed; and an operator has obligation to protect users’ benefit.
Mr. Xiang Cai, senior specialist at China Telecom’s Beijing Strategic and Planning Research Institute believe that users are to decide the future of PHS because PHS’ root-taking, budding, blossom, and its development to the current situation were all users’ choice.
The Future of PHS Lies with Data Service
“We must keep a sound business base today to explore the future.” Said Mr. Fuxin Xu, “I myself have been serving a telecom operator for a long time. It is a horribly hard to start a new network while discarding one’s own resource. The risk could be both failures. I believe that China Telecom and China Unicom shall stick to the quality of their original business because if their original business of fixed-line and PHS is dead, the new network is not going to be the remedy.” Mr. Xu added that operators need to be responsible for the state asset and for the users. By making use of the existing resources in a reasonable way, by satisfy the users with a maintained network and improved services, the operators can achieve the position to attack on a step ahead and defense on a step backward. The future expansion can be planned only if the operators have guaranteed income for today. Besides, Mr. Xu suggested Chinese operators to exert advantages of PHS by re-building its image. PHS holds the features such as low electromagnetic wave, high efficiency in frequency usage. It is superior to mobile systems in data transmission speed and cost-effectiveness. Hence, new value-added services can be developed and introduced to help switch the service focus from voice to data. New business clients including companies, institutions, government organs, underground mines, hospitals and hotels can be developed too. Japanese PHS operator WILLCOM is experience regarding this and can serve as our example in this case.
According to Mr. Xu, PHS’ best way out is innovation of operational mechanism. PHS was well accepted by Chinese consumers in the past eleven years and it shall have wide market perspectives in future. If independent subsidiaries can be established to operate PHS network after telecom restructure, then PHS can be developed in a less biased environment and PHS can have better chance to realize its past magnificence.
Mr. Yang has his own debate. He admitted that PHS was a product of the special age. He agreed that PHS was the poor’s mobile considering that a mobile phone used to be sold at close to RMB10,000 in early 90s. But he believed that PHS should back off the history because the age is gone. He didn’t support the idea to develop PHS continuously because there is no need to mention PHS as the poor’s mobile again. Telecom network tends to be unified in future, although PHS will have its market in a certain period of time as several access technologies existing. Mr. Yang reminded PHS industry not to be too optimistic.
Mr. Jing Yang, chief scientist of UT Starcom expressed his opinion from technical perspective. The three telecom operators will compete with each other on mobile internet business in future, while PHS and its successive technology are more advantageous regarding data service.
Ms. Hao revealed that Netcom Beijing has accumulated some knowledge and experience in operating mobile network, which are not considered very different from PHS network optimization and providing PHS value-added services. She introduced that Netcom Beijing is providing online data service at 128Kbps to PHS users now. Users’ feedback has been positive and effective speed to each user has been reported at over 90Kbps. At the current stage, a small amount of investment could enable the optimization of the data network, only if the policy barrier regarding roaming service can be removed, the amount of PHS users can be kept sturdy. PHS deserves a settle-down and it is able to provide better service for users.
Original Article in Chinese |
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