Thursday, March 11, 2004
WLL in China
In December, I had made a post about the Reliance group's foray in the telecoms market in India. Using wireless-local-loop (WLL) as the technology of choice, Reliance has already become the dominant player in the Indian market despite having entered it about a year ago. Obviously, Reliance is competing on extremely low prices and has now introduced prepaid plans ($77 for handset and plan, of which $72 can be redeemed in calls) which are even more aggessive than its post-paid plans. Clearly WLL is all the rage in India.
Asia Times reports the same is true in China as well, albeit with some major differences in the way the technology and its licensing have been implemented. In China, WLL acts more as a substitute for landphones (fixed mobility) while in India, WLL has actually begun to substitute mobile phones and landphones. The reason is the newly introduced unified licensing regime which treats WLL players on par with mobile players, allowing companies like Reliance to provide seamless coverage and roaming (the fracas over differing license fees is too long to go into here). Clearly, Chinese WLL players don't quite have the same clout with their government as Reliance does with India's. Whatever happened to Guanxi?
Salvation for the ailing fixed-line carriers came from an unexpected quarter: a wireless local loop (WLL) technology called Personal Handyphone System (PHS) that had been tried, without much success, in Japan. Retooled for the Chinese market by an obscure US-based company called UTStarcom (Nasdaq: UTSI) and rechristened "Personal Access System" (PAS), the service was quietly introduced in 1998 in small, remote cities in western China.
"The key was that when China Telecom lost their mobile business, they lost their growth point," says Ying Wu, the US-educated chief executive officer of UTStarcom's China subsidiary. "We saw a golden opportunity: Sure, the top 20 percent income earners will be cellular subscribers. But that leaves the middle 50 percent - 650 million people - who need wireless service but for whom affordability is the issue."
China Telecom was quick to recognize that this quasi-mobile phone service offered a back door into the booming mobile market. It gave it a brand - Xiaolingtong or "Little Smart" - and priced it low enough to bring mobility to the masses. A Little Smart handset looks like a cell phone and, for the most part, works like a cell phone: users can make calls, send text messages, disrupt meetings and annoy theater-goers just as they can with a standard cell phone. Technically, however, Little Smart is a limited-mobility extension of the fixed-line phone network. Think of it as a revved-up household cordless phone with a citywide reach: Little Smart users connect to the copper wire network through base stations placed on rooftops around their city. The only functional difference from cellular phones is that Little Smart users can't roam beyond their home cities.
That, and one more major difference - cost. Little Smart users pay about one-fourth of what regular cellular subscribers do for air time - a major draw for China's cost-conscious consumers. Subscribers are charged a monthly fee equivalent to US$3, and a 10-minute call averages out to about 12 cents.
Asia Times reports the same is true in China as well, albeit with some major differences in the way the technology and its licensing have been implemented. In China, WLL acts more as a substitute for landphones (fixed mobility) while in India, WLL has actually begun to substitute mobile phones and landphones. The reason is the newly introduced unified licensing regime which treats WLL players on par with mobile players, allowing companies like Reliance to provide seamless coverage and roaming (the fracas over differing license fees is too long to go into here). Clearly, Chinese WLL players don't quite have the same clout with their government as Reliance does with India's. Whatever happened to Guanxi?
Salvation for the ailing fixed-line carriers came from an unexpected quarter: a wireless local loop (WLL) technology called Personal Handyphone System (PHS) that had been tried, without much success, in Japan. Retooled for the Chinese market by an obscure US-based company called UTStarcom (Nasdaq: UTSI) and rechristened "Personal Access System" (PAS), the service was quietly introduced in 1998 in small, remote cities in western China.
"The key was that when China Telecom lost their mobile business, they lost their growth point," says Ying Wu, the US-educated chief executive officer of UTStarcom's China subsidiary. "We saw a golden opportunity: Sure, the top 20 percent income earners will be cellular subscribers. But that leaves the middle 50 percent - 650 million people - who need wireless service but for whom affordability is the issue."
China Telecom was quick to recognize that this quasi-mobile phone service offered a back door into the booming mobile market. It gave it a brand - Xiaolingtong or "Little Smart" - and priced it low enough to bring mobility to the masses. A Little Smart handset looks like a cell phone and, for the most part, works like a cell phone: users can make calls, send text messages, disrupt meetings and annoy theater-goers just as they can with a standard cell phone. Technically, however, Little Smart is a limited-mobility extension of the fixed-line phone network. Think of it as a revved-up household cordless phone with a citywide reach: Little Smart users connect to the copper wire network through base stations placed on rooftops around their city. The only functional difference from cellular phones is that Little Smart users can't roam beyond their home cities.
That, and one more major difference - cost. Little Smart users pay about one-fourth of what regular cellular subscribers do for air time - a major draw for China's cost-conscious consumers. Subscribers are charged a monthly fee equivalent to US$3, and a 10-minute call averages out to about 12 cents.
