CHINA TOPIX

11/22/2024 04:12:42 am

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Growing niche market in the world's largest mobile user industry

China Unicom

(Photo : Nokia) China Unicom took a hybrid 3G/4G approach, heavily taxing its existing HSPA+ network. This meant that the 4G deployment was spread too thin in more places while the 3G network was further extended into regional areas.

China, the largest mobile user market, is experiencing a fast-paced expansion of mobile networks for widespread connectivity. However, the inability of infrastructures to keep up with the latest advancements on connectivity, coupled with data and user overload, have caused connectivity problems for the giant nation.

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China's second largest wireless operator, China Unicom, is the most recent example of this problem. The company lost roughly 11 million wireless customers year-to-date which constitutes about 4 percent of its customer base, Forbes reported. The downturn was due to the bumpy rollout of the company's 4G network. Its customers jumped ship and benefitted the company's competitors such as China Mobile and China Telecom.

China Unicom's wrong step

The company launched the grand goal of building 4G coverage across the country, similar to what the larger China Mobile is planning. China Unicom took a hybrid 3G/4G approach, heavily taxing its existing HSPA+ network. This meant that the 4G deployment  was spread too thin in more places while the 3G network was further extended into regional areas. Because of this, the company added only 18.6 million 3G/4G users in the first eight months of 2015.

In comparison, China Telecom focused the 4G coverage development in key urban centers where better-off customers and early adopters are likely. This marketing plan brought 23 million users more to the company. Meanwhile,  China Mobile, the largest mobile operator, added 96 million customers to its subscriptions.

"That is what Unicom got wrong, and what we expect new chairman Wang Xiaochu to fix," Bernstein Research senior analyst Chris Lane told Barron's Asia. "Unicom made the mistake of chasing the broad 4G coverage that China Mobile was planning." Comparative studies showed that China Unicom could not afford the sort of density that the larger and better capitalized China Mobile was deploying.

Taking cues from India

The China Unicom situation has fleshed out the growing problem of low network quality caused by slow infrastructure update and fast technological upgrade. Aside from this, minor, non-urban centers are last to see improvements on connectivity, as shown by the focus of China Telecom and China Mobile on cities with wealthier markets. Even dense urban centers may experience poor network quality, given the reality that there are about 1.29 billion mobile users registered in China as of February 2015.

India, the second largest telecom market just behind China, has been plagued by network quality problems. Call drops are reportedly the top customer issues in the country.

Fortunately, an American company has commenced operations in India six months ago to solve the problem. 5BARz International (OTCQB: BARZ) has launched the network extender, a pioneering device that strengthens weak cellular signals to deliver high quality signals.

Led by former Apple CEO Gil Amelio, 5BARz developed the single-piece, plug-and-play device that solves the problem of dropped calls, delayed messages, and sluggish downloads.

The network extender aims for global distribution through mobile network carriers to revolutionize the way networks are built, and to provide the last-mile connectivity solution.

"My focus has always been on the 'international,' on something that is global, on something that resonates wherever you go," company CEO Daniel Bland said at last year's Mobile World Congress. "Three percent of all cell users around the world leave their network provider because of poor signal quality. And you look at the competition and realise that nobody has solved this problem. The carriers are looking for solution and that's why we are here."

As China remains the largest mobile user industry, even slight bumps down the road of connectivity will spell loss of millions of subscribers. Once 5BARz extends its global reach to the Chinese market, it could be the answer to the challenge of nationwide, cost-effective and high quality connectivity that telecoms are facing.

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