Friday, June 29, 2007

Wi-fi related VoiP service in China

China’s mobile phone market has grown quickly in recent years and is now the largest in the world. Mobile subscribers exceeded 380 million in 2005, with an average 60 million subscribers added each year. The Chinese mobile market size is expected to reach nearly 600 million subscribers in 2008 and 700 million in 2010.Traditional voice service is the main revenue source for China Mobile and China Unicom, but data and multimedia services are becoming increasingly important. Because of the additional bandwidth required to support these richer applications, there has been strong interest in 3G in China, and though licenses have not yet been issued at the time of this report, they are expected to be issued within 2006. Wi-Fi, with its growing availability and attractive data rate, has potential to become a complementary service to 3G in converged mobile phones.Voice over IP over WLAN, or Voice over Wi-Fi, also presents a strong opportunity in China for manufacturers of both converged cellular/Wi-Fi handsets and VoIP-only devices. Landline VoIP, provided by Ministry of Information Industry of the People’s Republic of China (MII) is already quite well-established in the enterprise environment in China, and as Wi-Fi gains increasing traction in that space, the flexibility, portability, and affordability presented by these devices will make them an attractive tool for enterprise users.In the home user market, because only telecom operators currently have the legal right to offer VoIP services, consumer adoption of VoWi-Fi will be slower. Three market inhibitors must be considered in this situation. First, government regulations prohibit the routing of Voice traffic form the internet to a telephone handset. Second, high usage fees at hotspots are prevent many Chinese consumers form considering such a service. Finally.the protracted wait for 3G services, soon to be ended, has distracted the carriers from other areas of focus. Telecom operators must identify ways to ensure continued profitability when offering VoIP services over Wi-Fi before they can be expected to offer the service on a large scale. Analysis International believes that legal consumer VoWi-Fi services will not be launched in China until after 3G licenses have been released.

The graph below illustrates the market occupation percentage of the China network operators.

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