Will broadband market operators monopolize the market? Private capital faces difficulties

On November 26, 2014, the Ministry of Industry and Information Technology issued the "Opinions on Opening the Broadband Access Market (Draft for Comments)", which encouraged private enterprises to participate in the construction and operation of broadband access networks, and private enterprises can also engage in broadband resale business. After the release of the opinions, hundreds of private enterprises submitted applications for pilot broadband access network services in just a few months, and more than 200 pilot licenses have been issued. In recent years, under the promotion of policies such as the Broadband China Strategy and the pilot program for opening the broadband access market, private capital has continued to enter the broadband access market to expand investment, and the number of users has grown steadily. As of the end of November 2017, Internet companies had developed a total of 44.6 million broadband access users, a year-on-year increase of 40.1%. But do private enterprises really have a bright future in the broadband business market?

Aipu Broadband's capital chain broke, and its online customers migrated to telecom companies

Recently, many netizens reported that the Aip Broadband they used at home encountered problems such as network disconnection and the customer service phone number could not be reached. The author learned that as early as December 11, Aip Broadband issued an "important statement" on its official WeChat public account. The statement said, "Due to problems in our cooperation with Founder Broadband under Founder Group some time ago, some areas in Chengdu have experienced network instability. In addition, some operators have recently been maliciously destroying our lines and publishing false and untrue information, causing users in some areas of Chengdu to experience network disconnection. Our company solemnly declares that it will continue to operate and is actively dealing with the disconnected areas. We urge the majority of users to actively report those who destroy our lines and publish false information. Once it is found to be true, our company will defend our interests through legal means!"

Recently, a notice appeared in front of the public, stating that due to the broken capital chain of Sichuan Aipu Network Co., Ltd. (hereinafter referred to as Aipu), it will not be able to continue to provide communication services after March 31, 2018. In order to ensure that the communication services of Aipu's online customers in Chengdu are not affected, with the approval of the Sichuan Provincial Communications Administration, Aipu's online customers in Chengdu will be transferred to the network of China Telecom Chengdu Branch (hereinafter referred to as the Telecom Company) from now on. The Telecom Company provides exclusive supporting policies for the transferred customers to ensure continuous communication services. According to Chengdu Business Daily, Aipu will not enter the telecommunications industry after transferring its users.

Unlike the rogue behavior of shared bicycle companies in 2017, after the capital chain of Aipu Broadband broke, it reported to the Sichuan Provincial Communications Administration and transferred users to the telecommunications company. Although the customer service phone is still unreachable and the office is deserted, it has solved the communication service for customers in the later stage. And the announcement stated that during the transfer process, customers will transfer on a voluntary basis. For users who have disputes with Aipu, they can communicate with Aipu in other ways to properly resolve related issues. In this way, Aipu Broadband can be said to be quite sincere.

Why is it difficult for private capital to enter the broadband market?

As for the fixed-line broadband business, the glory of some private enterprises in the past is hard to see nowadays. As of the end of November 2017, China Telecom still ranked first, with a total of 132.87 million wired broadband users. The total number of China Mobile reached 110.139 million. China Unicom's performance was not satisfactory, with a total of 77.503 million fixed-line broadband users. For this data, China Mobile's data is definitely the most eye-catching. After the Ministry of Industry and Information Technology issued the "Opinions on Opening the Broadband Access Market (Draft for Comments)", the industry unanimously believed that these private capitals would break the long-standing dual-strong pattern of "Telecom in the South and Unicom in the North" in the domestic broadband market. But what we have in front of us today is that the number of China Mobile's broadband users has grown by leaps and bounds. After the number of fixed-line broadband users exceeded Unicom in 2016, it exceeded 100 million in the third quarter of 2017, and the number of users had reached 110 million by the end of November 2017. The market strategy behind this growth rate is a big blow to the fixed-line broadband ace forces such as China Unicom and China Telecom. For these private capitals, the market strategy adopted by China Mobile has made it even more difficult for them to move forward.

It is understood that mobile companies in various places have introduced various preferential policies for network access. The author uses a 58 yuan Global Communication package. When applying for broadband in his hometown, he was given a free 50M broadband. Various preferential policies have attracted customers crazily. Under such a strategy, the low-price advantage of private capital no longer exists. At the same time, for private capital, they need to consider a variety of supply and demand relationships, the investment in the construction of basic network facilities is too large, and the cost of negotiating with property and developers, etc., which have made private enterprises suffer. Coupled with the country's speed increase and fee reduction, the low-price strategy of operators, and the advantages of "fixed-mobile" integration, private enterprises are really struggling!

However, most of the pilot access network companies are still profitable. Solutions always come with problems, and the problems that emerged during the pilot period are also a wake-up call for other companies in the industry. The reduction in access prices in the broadband market has not hindered some companies from making profits. Perhaps the broadband access network business pilot is just an introduction, and there is still a lot of room for future development.