Mobile phone application WeChat to remain free, says Tencent boss in Hainan
THE prospect of China's top three telecom carriers muscling in to grab a slice of the pie for WeChat, the popular voice and text messaging mobile phone application developed by Tencent, is upsetting users, who fear fees will be charged for what is now a free service.
"This is just another example of telecom companies using their monopoly status to stifle competition on the Internet," said Jenny Dong, a Shanghai office worker in her late 20s. "If they charge fees, they'll lose me."
Miao Wei, head of the Ministry of Industry and Information Technology, fanned rumors of fees late last month when he told an industry forum in Guangdong Province that the ministry is reviewing the idea of forcing Tencent to help defray the cost of the demand its free app places on China Mobile, China Telecom and China Unicom networks.
Fears are that Tencent may start charging users after pressured by the telecom carriers and split the income with the carriers.
Tencent president Liu Chiping said at the Boao Forum for Asia held on Hainan Island over the weekend that basic WeChat service would remain free and its large user base will offer room for cooperation with telecom operators.
CCTV News, citing an unidentified official close to the matter, reported last week that the telcos are meeting with ministry officials to work on detailed plans to require Tencent to pay for the WeChat service.
The carriers' reaction is not unexpected. As telecom carriers faced slowing revenues from traditional services, Tencent's WeChat users have swelled to more than 300 million in the little more than two years since the app was launched.
WeChat allows users to send each other website links and other interesting content from third party developers, such as restaurant reviews from other mobile applications.
It is also convenient for group discussions, whether in the form of text or voice messages. Many of my friends send each other voice clips when they're too tired to look at their mobile phone screens and type long sentences.
Because WeChat allows multiparty online voice chatting, it is viewed by telecom carriers as a business threat.
Shenzhen-based Tencent said in an earlier statement that it has no plans to charge individual users of WeChat. It added that the company intends to cooperate, not compete, with telecom carriers to their mutual benefit.
However, Tencent Chief Executive Officer Ma Huateng did acknowledge at a recent industry forum that the application does impact data traffic, especially the networks of 2G carriers.
"We hope to continue to collaborate with telecom carriers in the long-run through future data network upgrades, just like what we did in the 2G era," Ma said.
China Mobile and the other two telcos argue that WeChat occupies a large amount of data traffic and sometimes causes problems for voice calls and text messages.
Former China Mobile chairman Wang Jianzhou told the Boao Forum that interruptions to voice calls from online chatting tools and the extra cost incurred by carriers have become global concerns in recent years.
Not everyone agrees with that view.
"The interruption of voice calls is only an excuse," said Hu Yanping, founder the Data Center of the China Internet, a data and research provider.
"The real reason behind all this is that growth of data traffic income is not enough to compensate for the loss of text message income," Hu said.
Netizens have been venting their spleen online.
"It is not only WeChat, but also numerous mobile applications offered by start-up firms that are in danger if telco carriers dare to break the basic rules and regulations of the Internet world and double charge for their data traffic service," wrote Fang Xingdong, veteran industry observer and founder of research agency China Labs.
Indeed, 90 percent of netizens polled by Xinhua Net on Friday said they would stop using WeChat if the mobile messaging app were no longer free, according to a Sina News report.
Tencent shares on Monday rose 1.69 percent to HK$241.20.
Wireless data traffic has become a major driver for China Mobile. Its volume of 710 million mobile phone subscribers nearly doubled in the past year, providing much faster growth than voice calls and text messaging usage.
Revenue from its data traffic service increased 54 percent annually and made up of 12.2 percent of its overall sales.
Still, telcos have been squeezed by various smart phone applications that use free WiFi connections to send or receive instant messages.
Tencent, China's largest Internet service portal, already pays broadband operators for its numerous servers, and individual users also pay for data packages in their mobile phone bills every month.
Minister Miao said telecom carriers are under pressure to operate the wireless traffic networks on such a large scale and it's reasonable for them to charge extra fees.
I am not alone in questioning the role of the ministry in all this. Isn't it the government's job to create a healthy competitive environment and gradually deregulate barriers for smaller firms entering the industry?
The ministry should be working with telecom carriers to upgrade their third or fourth generation of data traffic networks to cover a wider region in the country.
Wang Ran, founder and chief executive officer of venture capital firm China eCapital, said it's reasonable for telcos to make adjustments in the price of data traffic networks if the money is used to upgrade the services.
"But it's a bad idea to collude with each other about charging a third party service provider and to base their pricing against the operator of the most competitive and popular software," he said.
The perception of telcos and top government regulators cozying up to one another isn't a good sign for market competition.
"It would be very dangerous if telcos want a piece of every cake when successful and popular mobile software are developed," said Kaifu Lee, former Google China head and chief executive officer of Innovation Works.
SOURCE: Shanghai Daily
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