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3G mobile in China: 8 things you need to know

Alvin Wang Graylin
3G mobile in China: 8 things you need to know Alvin Wang Graylin
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In November 2007, I wrote an article for iMedia Connection lamenting the delays in the 3G rollout in China and how it's affected the pace of mobile marketing adoption. I'm happy to report that on May 17, all three Chinese mobile operators will be releasing 3G mobile services across most major cities nationwide. As marketing professionals, here are a few things you should know to help you better understand what's happening and what you can do to take advantage of this new transition in the telecom industry.

1.       Not all 3G is created equal
Firstly, please note that all three Chinese carriers have been issued licenses for different 3G standards, so the phones of each carrier cannot be used with the SIM cards of the others. To take advantage of the full capabilities of each carrier's 3G services, subscribers will need to apply for new phone numbers starting with 189, 188 or 186 depending on the carrier of your choice. 

Tip: Which carrier will benefit the most from 3G? China Mobile has the Chinese developed TDS-CDMA standard which is the newest standard with some advantages in technologies (i.e. QoS), but is less mature and stable than the other standards. Their ramp rate is not expected to be too fast initially.
 
China Telecom has the US developed CDMA2000 standard and will have the best network coverage in China in the near term with over 300 cities covered by mid-May (compared to about 50 for the other two carriers). China Unicom has the WCDMA standard, which is the most widely adopted international 3G standard, and many newer high-end cell phones already support this standard with just a SIM card change. Also, rumors say Apple will partner with China Unicom on the iPhone, which will also help it ramp users in the near term.


2.       3G adoption won't happen overnight 
Although all three 3G standards offer advantages to users and carriers, it will take a fair amount of time for there to be mass adoption of 3G in China. Analysts are predicting about 200 million 3G subscribers within 24 months of launch. That will be about 25 percent of the total user base at that time, but will likely include a large number of the influencers and high-value subscribers within the population. All three carriers will provide subscribers with special sign up promotions and attractive data plans to accelerate user adoption.

Tip: Although 3G will get the headlines in the news, the near-to-mid term marketing programs should still be focused on 700+ million 2G and 2.5G users, although it certainly won't hurt to have some elements in the campaigns allowing 3G users to get some special experiences. 


3.       3G will enable richer mobile experiences
3G networks can offer transfer speeds that are five to 50 times faster than 2.5G networks. Along with the new and improved handsets, user experiences can certainly be much smoother and richer. These capabilities will allow for some exciting models of communication and interaction including steaming video, audio, 3D gaming, on-phone applets, etc.

Tip: For luxury brands or service/products targeting white collars, utilizing some of these new mobile technologies to communicate with your audience could get you noticed and create some good word-of-mouth results beyond your expectations. A simple thing to do (with relatively low additional cost) is having a richer mobile site targeted at 3G users in addition to standard WAP mobile sites.

For mass market campaigns, do continue to integrate 2G/2.5G mobile elements that will work on older phones such as SMS, MMS and simple WAP sites. With so much more content and
information on the mobile internet, search will become more and more important. Don't forget to put mobile search into your marketing mix as you do with web search today.


 

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4. 3G will give mobile internet a new lease of life
Many had forecasted that with 3G, the death of the traditional WAP site was soon to come. But experiences internationally show that one of the biggest benefits of 3G for users is a smoother mobile internet experience. The bigger screens and faster downloads make surfing on a phone finally bearable and sometimes even enjoyable, especially for WAP 2.0 (XHTML formatted) sites. The faster speeds will spur on rapid growth in mobile internet usage for 3G users, but the lower data rates will increase usage even from 2.5G users. There are about 200 million mobile internet users in China already and it's only going to grow.

Tip: Do make sure a mobile internet site and interactions are core piece of your future campaigns. Be sure your mobile sites support WAP 1.x and WAP 2.0 standards, and optimally can detect phone information and adjust display content accordingly. Just as you plan ahead to integrate PC web interactions from the very start, you'll want to do the same for mobile internet elements going forward.

5. 3G will make people more dependent on mobile devices
The handset is already one of the three things people in China wouldn't leave their home without, but with the new generation of phones this will be truer than ever. As subscribers grow to depend on getting their emails, news, maps, and entertainment from these devices, there is no going back. 90 percent of users already leave their cell phones on 24/7, and 60 percent sleep next to their phones. It's going even higher from here.

Tip: The more users depend on it, the more effective it will be as a marketing vehicle. It's the only device that can reach and get users' attention pretty much anytime of the day or night.  Properly used and with privacy in mind, mobile will deliver results for you while being extremely effective and measurable. Doing it right is not as easy as it may sound, so please work with professional mobile marketing agencies to help plan and execute your mobile campaigns to fully utilize the benefits of mobile without alienating your customers.

6. 3G will make mobile operators more important in the wireless value-chain
In many international markets, the mobile operators (carriers) are the primary distributors of phones from handset manufactures, who then redistribute them to subscribers. In China that's not really the case today (except for CDMA) where 80 percent of phones are sold via retail. With 3G handsets, that's going to change and most devices will be procured and redistributed to users as is the case with most other markets. Operators will subsidize handsets and lock users into long term plans which should help to reduce the switching costs for 2G users to the new network.

Tip: As a result of their increased control over the devices and pre-loaded software, the carrier mobile internet portals will become better advertising properties to reach customers. The carriers may even be able to help better target users due to their increased access of subscriber information, so ads with the carrier portals are certainly worth a try.

7. 
3G ecosystem needs advertising to succeed
Building out 3G networks will be very expensive for all three carriers (over $50 billion over the next two to three years). And with ARPU (average revenue per user) dropping steadily for the last ten years, it's not clear the carriers can recover the cost by data fees alone. 

As the mobile internet grows and the sites get numerous, these companies will need revenue to keep them alive and providing the content users want. With over 700 million mobile subscribers in China, it's clear mobile will become a serious stand-alone marketing medium soon and advertising will be one of its core revenue sources. The mobile marketing ecosystem is forming now and all of you can play a role in how it develops in China.

Tip: Although mobile will become a standalone medium soon, it's important to note that it will always be best to integrate mobile marketing elements with traditional and internet marketing vehicles. By combining the mobile with your existing campaigns, you'll give customers an easier way to interact with your brand and gain their attention. Mobile will make traditional media interactive.

8. 
Experience 3G for yourself
You can read articles and books about 3G and mobile benefits to advertising, but there's no replacement for experiencing it yourself. Get your hands on a 3G phone and try out all the features for yourself. If you don't, your competition will and they will find better ways to market to your audience through the power mobile medium. And by the way, in about three years, China will start to release 4G mobile services around the LTE (Long Term Evolution) standard. Look for more on that in a future article…

Tip: Over 10 percent of phones in the major cities already support WCDMA (Unicom's standard), especially recent 'Shuihuo' models from other market. Check with your manufacturer, because you may be able to take advantage of 3G in China just by plugging in a new SIM card. If you want to stay on China Mobile or China Telecom, you could probably get a 3G phone for free or with a big discount just by signing up for a 1-2 year contract.



Alvin Wang Graylin is the CEO and co-founder of mInfo Inc.

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