WeChat challenges telecom operators

Challenged by the fast expansion of online messaging application WeChat, the short message services (SMS) of China's three telecom carriers saw much slower growth in the first two months this year compared with the same period of the previous two years, the Ministry of Industry and Information Technology (MIIT) said in a report Tuesday.

A total of 157.61 billion messages were sent via the three telecom carriers in January and February, an increase of just 0.7 percent year-on-year, well below the 7.6 percent rise in the same period of 2012 and the 5.7 percent rise in 2011, according to the MIIT data.

"The increasing popularity of new types of instant messaging services like WeChat is a major reason behind the slowdown in traditional SMS activity," the MIIT said.

WeChat, which allows users to send texts and voice messages and even have Wi-Fi video chats, is a mobile chat application launched by Internet firm Tencent Technology Co, China's largest Internet company by market value.

For users, the most attractive characteristic of Wechat is that "its services are free," Mao Wenlong, a 24-year-old staff member at a gas station in Hami, Northwest China's Xinjiang Uyghur Autonomous Region, told the Global Times in a telephone interview on Tuesday.

Media reports speculated earlier this month that Tencent might have to start charging fees as a result of pressure from the three telecom operators, who are considering charging Tencent bandwidth fees on a per-WeChat-user basis.

A member of Tencent's PR staff told the Global Times in a previous interview on March 14 that "the WeChat instant messaging service is still free to users," but did not comment on how long that would remain the case.

The three telecom operators - China Mobile, China Unicom and China Telecom - have felt pressure from Wechat, not only because of a decline in growth of their SMS activities, but also because their calling services are being challenged by Wechat's increasingly popular voice and video calls, Li Zengyue, president of China Mobile, said at a conference in Guangzhou in December 2012.

Mao said the he prefers to have Wi-Fi video chats with his mother via Wechat, rather than making a call. "The video chat is lively and free," Mao noted.

But Yan Xiaojia, an analyst at Analysys International, told the Global Times Tuesday it is unlikely that Wechat will grab a large share of the market for call services, because Wechat is more like a social network platform and cannot replace traditional phone calls.

Wechat is likely to focus on gaining more users instead of making profits, at least for the next year, Yan noted.

Wechat has also started trials aimed at expanding into e-commerce. Users can scan codes printed on posters in places such as restaurants or shops using Wechat, and then receive membership cards or coupons. They can also share the codes they have scanned via Wechat, which could increase the popularity and use of the technology.

Wechat has attracted over 300 million users within two years, Tencent said on its Sina Weibo account on January 15.