9 correct views on the cancellation of data roaming charges

On July 1, data roaming charges were officially cancelled. Together with the cancellation of mobile phone roaming charges last year, roaming charges will now become history. While the media and the public are immersed in assessing how many people will benefit, I think there are some issues regarding the development of the telecommunications industry itself that also need to be reflected upon.

Let me briefly talk about 9 points of view.

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1. Administrative power has become a key force in promoting deep market competition

There is no doubt that administrative power has become the most critical driving force behind major structural changes in the telecommunications industry, especially the tariff reform that is quite popular. Telecom operators almost all follow the "order", and passive embarrassment frequently occurs - the embarrassment lies in the fact that in the eyes of telecom operators, they have fought tooth and nail over prices due to competitive needs, but the public and senior management still feel that the tariffs are too high, and the communication gap between the underworld and the government can be seen.

There is no doubt that administrative power will continue to play a key role in the reform of telecom operators, and telecom operators who have no strategic foresight and planning capabilities will continue to respond passively.

2. Eliminating roaming charges will not force telecom operators to innovate

Many people take it for granted that the abolition of roaming charges may force telecom operators to find new growth opportunities through innovation. In fact, this is just a assumption. First, the system of telecom operators has determined that innovation will not happen. Second, looking around, Internet giants, IT giants, telecom equipment manufacturers, mobile phone manufacturers, and traditional industry giants are all surrounded by wolves in the context of digitalization. Where is the room for innovation for operators?

3. Unlimited price competition will be the mainstream competition model in the future

The entire social environment has evolved into an expectation of annual fee reductions for the telecommunications industry. When encountering telecommunications services, the first thing that comes to mind for everyone and every organization is price. This has become an inertia and the dominant thinking logic of the entire society. With such an environment, unlimited price competition will inevitably become the mainstream mode of market competition among the three major operators.

4. The EU’s approach may provide some lessons

After more than ten years of debate, the European Union finally abolished roaming charges. However, in order to avoid vicious price competition, the EU adopted a practice that if a user card belonging to a local operator is used in a different place for more than a prescribed period of time, which seems to be 4 months, the user needs to give an explanation, otherwise additional fees will be charged.

This avoids the problem of different charges in different places and card confusion.

5. Regulators’ thinking is locked in by prices

According to the current regulatory logic of the development of the telecommunications industry, whichever part of the business becomes the main revenue contributor will be quickly required to reduce fees. 5G, which is characterized by large traffic and large bandwidth, may face an extreme pipeline price situation. But where will the huge scale of investment required for 5G construction come from?

Currently, some operators still have income and profits are still positive, but the global telecommunications industry is not doing well. Deutsche Telekom, British Telecom and France Telecom are all cutting jobs and reducing costs. The United States has abolished network neutrality, and they are all preparing for the winter. Chinese operators will not continue to prosper forever.

6. This is China’s version of net neutrality

The cancellation of roaming charges for data traffic is a major boon to Internet content, gaming, and video services. Every time the speed is increased and the fees are reduced, it is actually the Chinese version of network neutrality, but it is different from the form of network neutrality in the United States. In fact, it is the sacrifice of growth by telecom operators that has brought prosperity to the Internet.

This is part of China's version of network neutrality, also known as speed increase and fee reduction.

7. Telecom operators made huge concessions, but they did not receive applause

Media reports said that data from the State-owned Assets Supervision and Administration Commission showed that through the first two rounds of major speed increases and fee reductions, Chinese operators collectively gave up 130 billion yuan in profits.

This figure is the sum of China Telecom's net profits over the past ten years and China Unicom's net profits over the past ten years, which is equivalent to these two major telecom operators making no profit at all over the past ten years.

However, it did not receive any applause. The reason for this was that the concessions were made without any differentiation, especially when they were made under administrative power. This was a passive conscience-seeking, and the public did not buy into it. The applause did not go to the operators.

8. Winning by quantity and selling at a low profit margin is pure self-deception

Such measures as taking various measures to increase user usage, so-called winning by volume, small profits but quick turnover, in fact everyone knows that it is pure self-deception. Unlimited data packages have become popular, and fierce market competition can only quickly reduce prices. After years of increasing volume but not increasing revenue, the gap between volume and revenue has become increasingly larger.

There has been no solution for so many years, is it different now?

9. Content management should become the core competitiveness of operators

The correct logic is that the pipelining of operators is inevitable, and the dream of making money through pipelining has been shattered, so where is the way out? The author believes that content management, from traffic management to content management, is the most correct choice to deal with pipelining.

And how to manage content? - You need to learn from unreliable, unscrupulous and down-to-earth Internet companies. In fact, you don’t have to operate it yourself. The three major operators all have investment companies, so you can just invest more.