Keywords in the 4G virtual operator era: opportunities and challenges coexist

Introduction: In 2014, the 4G industry developed rapidly around the world. In China, both operators and domestic mobile phone manufacturers are facing important strategic changes. Last Friday, the 4G and Virtual Operators Summit Forum, which brought together the three major operators, several major domestic mobile phone manufacturers and related enterprises in the industry chain, was held in Jinggangshan, Jiangxi. This summit gave us a preliminary grasp of the overall development of China's 4G industry. If we use one sentence to summarize the current panorama of the 4G industry, it is "opportunities and challenges coexist."

Three major operators: 4G network + terminal + service

The three major operators' support for 4G is directly reflected in the construction of base stations. According to Ge Qi, deputy general manager of China Mobile's general department, as of June 30 this year, China Mobile has built 410,000 base stations, many of which are co-built with 2G and 3G networks. In addition to network construction, China Mobile will also focus on the development of 4G terminals and digital services. In the first half of this year, major mobile phone brands have launched 4G smartphones, and China Mobile expects that its 4G terminal devices will exceed 100 million by the end of the year.

China Unicom's strategy is to develop "4G/3G business integration" and 4G/3G terminal collaborative development, combining network enrichment with high cost performance. China Telecom emphasizes the mobile payment industry chain and proposes virtual operators' considerations in reducing capital costs.

Although the construction of 4G network in my country still needs to be improved, especially the indoor 4G network and the 4G network coverage in third- and fourth-tier cities are still not in place, the gap between the development of 4G network in China and that in foreign countries is gradually narrowing. After the country issued TD-LTE and FDD LTE licenses, the three major operators proposed different strategies for 4G development according to their respective current situations. It can be predicted that more 4G terminals will be launched in the second half of this year.

Domestic mobile phone manufacturers: opportunities and challenges

Domestic mobile phone manufacturers such as Huawei, Xiaomi, Coolpad, and Meizu all launched 4G flagship smartphones in the first half of this year, mainly targeting the mid-to-high-end market. The sales performance of domestic 4G smartphones in the first half of the year was good, especially consumers in the mid-to-high-end mobile phone market were more inclined to buy smartphones that support 4G networks.

At this summit, the 4G strategies of several major domestic manufacturers have different characteristics: Xiaomi is strengthening its competitiveness in systems and cloud services; Huawei is actively seeking technological innovation; Coolpad is expanding its European and American markets on the one hand, and exploring new channels such as e-commerce on the other; Meizu is taking the opportunity of the launch of its new flagship product (MX4) to expand its product line layout and the number of stores; ZTE will be committed to maintaining user information security; OPPO is developing stylish products based on the deep needs of users.

In the 4G era, domestic mobile phone manufacturers have both opportunities and challenges. Compared with foreign LTE-A networks, there is still a lot of room for improvement in the construction of my country's 4G networks. According to Lin Bin, president of Xiaomi Technology, Xiaomi still faces pressure in the research and development of 4G mobile phones (antennas). On the other hand, looking at the entire mobile phone market, there are still a large number of consumers who are not inclined to choose 4G mobile phones, and the market for 4G terminals mainly tends to be middle- and high-income groups.

According to data released by Sun Qi, vice president of Sino, 30% of users tend to choose 4G mobile phones, while only 16% of consumers who spend less than 700 yuan expect their next mobile phone to be a 4G mobile phone. It can be seen that from the perspective of user demand, the popularity of 4G mobile phones still needs to be expanded.

Virtual operators: the best of times/the worst of times

In the development of the 4G industry, virtual operators are a force that cannot be ignored. In the words of Wang Xianshu, director and CEO of Bus Online, for virtual operators, the development of the 4G industry is both the "best era" and the "worst era".

So far, three batches of private enterprises have obtained virtual operator licenses, including JD.com, Telling Telecom, Bus Online, and Aishide. According to Chen Liang, vice president of Aishide, domestic virtual operators are still in the blue ocean and have huge market space. Compared with the three major operators, virtual operators have the advantages of personalized and differentiated services, which is undoubtedly beneficial to their development.

The virtual operator companies that have obtained licenses include both Internet companies and channel operators. In addition, Internet companies such as Baidu, Xiaomi, and Youku Tudou are applying for the fourth batch of licenses. For these companies, virtual operator business makes it easier for them to integrate resources using their huge user base and build a more complete ecosystem.

On the downside, virtual operators are currently facing problems such as small user base, small profit margins from mobile resale, and difficulty in recovering funds. Their future development will still need to go through a relatively difficult stage of development. As Wang Xianshu of Bus Online said, virtual operators have just started to enter the market this year, and perhaps next year will truly be the first year of virtual operators.