The first billion

20 October 2011
By Dr Mike Short


Incoming IET president for 2011/12 Dr Mike Short, vice president of Telefonica Europe, considers the lessons we can learn from the largest mobile market in the world.

  incoming IET president 2011/12 Dr Mike Short  

It looks like China will reach a billion mobile subscriptions and be the first country to reach this landmark (with India running close) before this time next year. Their head start is perhaps a population of 1.3 billion or 20 per cent of the world's population, but China has now been the world's largest mobile market by customer total for over ten years, having skipped analogue mobile or first generation altogether.

China growth story

The world's largest mobile market, China, has almost reached the 1 billion customer milestone when June 2011 saw a 1.2 per cent monthly increase in the total number of mobile subscribers to 906.8 million, data from the country's three telecom operators has showed.

China Mobile, the country's largest mobile carrier, said its total mobile subscribers in June increased to 616.79 million, including 35.03 million 3G subscribers.

China Unicom, the country's No. 2 mobile carrier, said its total mobile subscribers rose to 181.61 million for the month, including 23.95 million 3G subscribers.

Mobile subscribers at China Telecom, the smallest of the three mobile operators, increased to 108.37 million, including 21.54 million for 3G subscribers.

China market characteristics

The figures above mask many key characteristics of this huge market: there are only three operators for the whole country, and all are highly vertically integrated. Each of the operators combine fixed, broadband and mobile services, as encouraged through government, economic and licensing policies.

In addition, industrial policy has determined that CU/CM sell mobile based on GSM standards, but CM/CT is being encouraged to sell 3G based on new Chinese standards. However, it is still unclear what may happen with new spectrum and LTE (or ‘4G’) services.

According to IDATE, at the end of 2010 the mobile subscriptions market was three times the fixed line market or five times based on the number of customers subs or gross revenues respectively.

The average service revenue per subscription is fairly low at less that 60 Euro per person per annum, and less than a quarter of the annual UK level, whilst Korean mobile handset manufacturers have now overtaken globally the mobile brand leader Nokia in the last quarter according to IDC, the Chinese brands of ZTE and Huawei are now both in the top eight. Including their other OEM manufacturers China now produces more mobiles than anywhere else in the world.

Internet adoption through mobile is high, but expected to involve more Chinese Internet companies (e.g. Baidu as market leader for Search) as opposed to the American ones better known in the West. The rise of the sub $100 smartphone this year is expected to propel high innovation and usage. China Mobile's investment in February 2010 for 20 per cent of Shanghai Pudong Development bank is expected to herald new mobile financial services.

Global innovation

With the expectation of more than six billion mobile phones globally in 2011 we will need to take key lessons from the largest mobile market in the world, given their huge scale, and influence on standards, manufacturing and design.

We are all innovators in mobile services now.

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