New broadband players may disrupt the pricing structure

The broadband market has become less peaceful since last year, and after the Spring Festival, broadband price wars have quietly begun in various places.

"China Mobile's recent broadband prices in Shanghai are around 400 yuan, and there is also a 78 yuan monthly package that includes cable TV, 200 minutes of calls and 20 megabits of broadband," a person in charge of Dr. Peng in Shanghai told China Business News.

In fact, with the release of national policies, the competition between private capital and the three major operators in the broadband market will become more intense. In addition to Shanghai, China Mobile's "price reduction" trend is also very obvious in various places. In order to respond, private enterprises such as Dr. Peng and Founder Broadband are also launching low-priced broadband.

Zou Xueyong, secretary general of the China Virtual Operators Industry Alliance, told reporters that with the issuance of virtual broadband licenses, the traditional operator's pricing model will definitely be broken. He said that if value-added services develop quickly, it may even lead to free broadband.

Price war is raging

Recently, many users have received promotional text messages for Shanghai Mobile's broadband packages, where users can enjoy high-speed broadband Internet access for only a few dozen yuan per month, or four or five hundred yuan a year. A mobile insider revealed that Shanghai Mobile has formulated a broadband development plan for 2015, and its offensive on broadband will be "much more aggressive" than last year.

In addition to lowering broadband prices, China Mobile has also been more active in promoting broadband services than before. According to media reports, some China Mobile business halls require frontline employees to set up stalls at the entrance of residential communities every night to sell broadband. In addition to the public customer market, China Mobile has also invested heavily in competing for the government and enterprise customer market.

"China Mobile is trying to grab market share. It is a latecomer, so price war is normal." An insider of Snail Mobile told reporters that China Telecom wants to make money from fixed-line broadband, while China Mobile is planning to develop a full range of businesses, and its profit point lies in mobile business.

China Mobile officially obtained the qualification to operate fixed-line business at the end of 2013, and then quickly launched the "Hejiajia" business for public users, focusing on wired broadband, mobile virtual network, and smart set-top boxes, hoping to use wired broadband to drive the development of 4G mobile business. Since last year, China Mobile has been rolling out broadband advertisements across the country, with the slogan "Only one yuan a day".

"China Mobile has invested a lot of money in the layout of local network access. For example, in some cities, China Mobile has signed exclusive agreements with developers and property management companies to enter residential areas at high prices." A broadband service provider who did not want to be named told reporters that the broadband price war has actually begun. According to data, telecom operators account for more than 90% of the market share in broadband access. Due to the development of mobile Internet, the broadband market is still not saturated, and the competition for users will be more intense in the future.

The above-mentioned Dr. Peng official told the reporter that there is no problem with the price. "On the one hand, users have to consider the quality issue. On the other hand, China Mobile does not use its own network, so the service and business links may be lengthened, such as the order decomposition process." The above-mentioned Dr. Peng official told the reporter.

The package model will be broken

"In the past, broadband was very opaque. For example, some manufacturers wholesaled five 10-megabit (lines) to residents of a building for use, but when users paid, they might be charged 10 megabits per household. The phenomenon of fake broadband and black broadband is very serious." Zou Xueyong told reporters that with the competition in price wars, the downward trend in broadband prices is inevitable. It can be foreseen that companies that profit from broadband prices will definitely not be able to succeed in the future.

The “long-dull” broadband market may be ready for a storm.

Amid the Internet+ boom, broadband has become the most important connection tool in the ICT industry. However, according to market data, although there are many service providers who have obtained relevant licenses or qualifications, broadband has always been a game played by a few people: Currently, broadband access by private enterprises accounts for less than 10% of the market share.

On December 25 last year, the Ministry of Industry and Information Technology officially issued the "Notice on Opening the Broadband Access Market to Private Capital", encouraging private capital to enter the broadband access market through various modes such as building the infrastructure required for broadband access network services, cooperating with basic enterprises and sharing profits, and leasing access network resources of basic telecommunications enterprises, so as to provide users with more choices and better services. The notice was officially implemented in early March this year.

"There are 16 pilot cities in China that have opened up the broadband market to private enterprises, including Shanghai, Guangzhou, Nanjing, etc. The pilot period is 3 years." Zou Xueyong told reporters that usually, a region will have no less than two licenses, so it is expected that there will be more than 32. According to reporters, virtual operators such as Sharing Communications and Suning Internet, as well as CDN service providers such as ChinaCache Network and Wangsu Technology are currently competing to apply for broadband access network qualifications in the above-mentioned cities.

Zou Xueyong told reporters that the most important thing for private enterprises to enter the broadband market is to do two things. The first thing is to target the original black broadband and make prices and speeds more transparent; the second thing is to break the monopoly of the original operator camp and try to replace the previous "fee package" model with a more flexible payment model. He gave an example, for example, after a video website applies for a broadband license, users of the service can obtain "targeted" traffic and services for video services, and broadband will be more personalized.

The above-mentioned Pengbo official told reporters that the era when broadband was sold as a resource has passed, and now it is more inclined to be a service.

Competition for the entrance

"Private enterprises are interested in the broadband market, and fundamentally they are also looking for an entry point for value-added services." Zou Xueyong told reporters that it is obvious that broadband is the largest entry point into the community, and every household needs a broadband connection. This is a bit like a form of logistics. The purpose of competing for the "last mile" is to get their business into every household and then make money through value-added services.

Zou Xueyong believes that some virtual operators aspire to become the Xiaomi and Haier of smart home construction, while others hope to develop their own business in education or games. Broadband is also an indispensable tool for entering the home market. "Any smart home business cannot be separated from the network. Virtual operators have both mobile broadband business and private broadband licenses, which is like adding wings to a tiger. When building and promoting their own smart home products, they no longer have to worry about losing control of the network."

Previously, Dr. Peng launched the high-definition set-top box Damai Box in October 2013, and will also launch Damai router, Damai video stick, and Damai game controller. In terms of cloud services, Dr. Peng has acquired a stake in the license holder Galaxy Internet and cooperated with many video websites to obtain massive video content. At the same time, it has launched a variety of services such as cloud games and cloud education.

The above-mentioned person in charge of Pengbo explained to reporters that the company does not simply divide its customer base into individuals and broadband, but breaks it down into "personal broadband family movie-watching user group", "personal broadband family game user group", and "personal broadband family education user group", and does targeted sales. Only in this way can it find real paying users. For example, there are value-added charges for games and distance education.

"During the sales process, we will tell customers whether they need to watch movies or whether they have smart home products that need to be connected to WiFi for management. These are not the traditional way of selling things by operators." The above-mentioned person in charge of Dr. Peng said that the operator's management system is relatively simple and limited to communications, and it is difficult to do business in a detailed manner. The home sector has lengthened the industrial chain. Super routers and smart homes are not what traditional operators do, and it will be difficult for them to do so in the future.

"But with the competition for business, the red ocean battle in the broadband market will soon come. It is not easy to compete with basic operators in traditional communication business." The above-mentioned broadband service provider who did not want to be named said that the issuance of licenses will not begin until at least the second half of the year, and this price reduction campaign will not be a short-term battle.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.