Challenge of IM inspires new China Mobile plan

Carrier will introduce a service that combines contacts, phone, web

Chinese telecom operator China Mobile Ltd, which has been hit by mobile instant-messaging tools such as WeChat, says it is determined to fight back by introducing an integrated communication service this week.

The company unveiled a plan on Wednesday at the Mobile World Congress 2014 held in Barcelona, Spain, saying that it aims to help consolidate the functions of the phone, contacts and messages in customers' mobile phones by upgrading them into a new format.

People do not have to install any communication applications but can send texts, pictures and other information such as their location to friends or family members directly after pressing the messages icon. The service is charged by the amount of data traffic it uses.

Under the new contacts interface, China Mobile provides clients with multiple Internet-based services, such as group chatting, personal status or information sharing and recommendations. The new phone allows people to experience high-quality voice or video calling by using an advanced technology called VoLTE.

China Mobile said its integrated communication service is scheduled to start commercial trials by end of the year. An official widespread release is expected in 2015.

Li Yue, chief executive officer of China Mobile, said the fourth-generation (4G) technology will create a new development environment in China and usher in a new age of mobile Internet.

"A big challenge for telecom carriers is to move toward the Internet. China Mobile hopes to seize opportunities in the mobile Internet era and focus on the basic elements of people's mobile phone interfaces. In this way we can gain some advantages," Li said.

Analysts doubt that China Mobile's move is a sign it is exiting the traditional text-message business and moving wholeheartedly toward data operations. However, Ge Qi, deputy head of China Mobile's general affair department, said the company will not abandon short text message services but will upgrade its operational model.

China Mobile's business at best flattened or even shrank over the past two years after mobile applications such as WeChat, an instant-messaging tool developed by Tencent Holdings Ltd, lured a huge amount of people to real time communications, rather than sending text messages or making calls in the traditional way.

During the eight-day Spring Festival holiday, Chinese people sent about 18.2 billion text messages, down by 42 percent year-on-year, according to the Ministry of Industry and Information Technology. It was the first time in 10 years that China saw a drop in the rate of its Chinese New Year blessings messages.

In contrast, the average mobile network data traffic per capita rose by 63 percent to 46.6 megabytes during the same period.

According to iResearch, a Chinese research firm, about 20 percent of the total blessing messages sent in China during the Spring Festival were via WeChat.

"If China Mobile does not transform, it has no way out," said Fu Liang, a telecom analyst. "But what measures a successful integrated communication service does not lie in how many smartphones install the service, but in how many Internet companies join in to contribute to the service," Fu said.

Five mobile phone manufacturers, including Samsung Electronics Co Ltd and Huawei Technologies Co Ltd, have publicly expressed support for China Mobile's new service.

"We hope more mobile phone vendors will partner with China Mobile to advance the service. We always hold an open cooperation attitude," Li said.

Huang Meng, a telecom analyst with Beijing-based investment company Eagle Stone Investment, said if China Mobile fails to attract enough clients to use its integrated service, then the service may fade away gradually. "For example, besides WeChat, what other mobile applications have gained in popularity?" Huang asked.