“Rebuilding a China Mobile” may be just one step away

In "One Step Away", Jiang Wen plays Ma Zouri, a young man from the Qing Dynasty. He tells such a story at the beginning and end of the film - he was "a popular person around the old Buddha". At that time, the old Buddha had to listen to his ideas. It was he who proposed to cut the pigtails... When he was happy, he went to get drunk, "and woke up in the Republic of China". The same pigtail was cut, but he was cut off in the Qing Dynasty, and he cut his own pigtail in the Republic of China. He could have been a great figure who changed history, just one step away.

Just like the story of "cutting braids" told by Ma Zouri in the movie, the same is cutting braids, but the one who had his braids cut off was in the Qing Dynasty, and the one who cut his braids himself was in the Republic of China. There is only one step between going with the flow and passively accepting, but the results are very different. China Mobile (including Telecom and Unicom) was cut off its braids by the BAT three giants led by Tencent using OTT services, which led to a significant decline in SMS and voice services, and lost the opportunity in the mobile Internet era.

China Mobile was once the first operator among the three major operators to enter the mobile Internet. China Mobile's Fetion was once the second largest social tool after Tencent QQ. The free SMS service based on mobile numbers provided by Fetion once successfully established a competitive barrier for China Mobile. China Mobile's SNS product 139 Lobby was launched in May 2009, three months earlier than Sina Weibo, which was launched on August 28, 2009. China Mobile once had the initiative to cut off its own braids, but in the 2G era when it could make billions of dollars a day by digesting the "demographic dividend", China Mobile still did not have the determination to cut off its own arm. Therefore, in the smartphone revolution launched by Apple mobile phones in the 3G era, due to the constraints of network standards and terminals, China Mobile was finally killed by OTT companies. China Mobile started early in the layout of mobile Internet, but in the end it was late, and was only one step away from successfully transforming into the mobile Internet era.

After three years of suffering in the 3G era, where the network standards were inferior to others, the mobile terminals were controlled by others, and the voice and text messages were lost, China Mobile soon ushered in the 4G era, which allowed it to make a comeback. In just one year, China Mobile built 500,000 4G base stations, sold 100 million 4G terminals, and developed 80 million 4G users. All of this was called a "miracle" by China Mobile. Therefore, at the China Mobile Global Partner Conference held in Guangzhou on December 19, 2014, China Mobile Chairman Xi Guohua put forward the great declaration of "Rebuilding a China Mobile".

According to China Mobile's vision, China Mobile will pay more attention to innovation and tap into its unique advantages; secondly, it will focus on the transformation of concepts, mechanisms and systems, and use the Internet's concepts or thinking, or mechanisms; thirdly, it will focus on win-win cooperation and create a good ecological environment; fourthly, it will develop the role of capital flow, information flow and logistics. Xi Guohua also specifically mentioned that China Mobile will focus on the growth of the third curve represented by digital services in the future. Within China Mobile, the new media digital content field is considered to have great development potential. This is because accelerating the implementation of corporatization reforms in the new media digital content field is of great significance to cultivating China Mobile's third growth curve and future sustainable development, and is an important sign of its in-depth promotion of reform and innovation.

In the field of digital services, China Mobile has made corresponding arrangements for the personal market, government and enterprise market, family market and the Internet of Things, and has also released three new (new calls, new relationships and new text messages) integrated communication terminals. The most important of these is the "Migu Technology and Culture Group" that surfaced in August 2015, integrating five subsidiaries of music, video, reading, games and animation. This is indeed China Mobile's most high-quality asset in terms of content. As a content aggregation platform, Migu Company is optimizing its business model and improving its service capabilities, with the goal of using its share to achieve 100 billion, 500 billion or even 1 trillion yuan.

After experiencing the pain of being “one step away” in the 3G era, China Mobile does not seem to intend to repeat the same mistakes in the promising 4G era. For China Mobile, 4G is indeed the best and perhaps the last chance for China Mobile to transform into the mobile Internet. Looking back at the three different stages of “2G-3G-4G” that China Mobile has gone through, we can see that the three stages were driven by completely different forces;

The 2G era was the best era for China Mobile. It was also a customer-driven era, with revenue growth achieved naturally based on the demographic dividend. This was the "elephant running fast" stage.

The 3G era was the worst era for China Mobile. This was an era driven by terminals. The sudden explosion of the smartphone market changed the entire Internet ecosystem. OTT revolutionized the operators. China Mobile, whose terminals and networks were not satisfactory, naturally lost the momentum for rapid growth. This was the stage of "the elephant walking slowly".

The 4G era ushered in an era driven by business. It is both the best and the worst. The good thing is that China Mobile has regained the right to speak on the leading network advantage, but the bad result is that the large traffic entrance of the mobile Internet is monopolized by BAT and other companies, and the long-tail traffic is also purchased by BAT and other companies. China Mobile can only survive as a pipeline for mobile Internet traffic. However, 4G brings about the explosive development of data traffic. It is predicted that the compound annual growth rate of traffic will reach 61% from 2015 to 2018. This means that the existing traffic entrances and content will not be enough to carry such a high-speed growth of traffic development. 4G may lead to a new content ecosystem dominated by high-traffic content such as video, music, and entertainment. If we use Lei Jun's words to comment on the mobile Internet, China Mobile, the elephant, stands at the outlet of 4G high-speed mobile Internet. This is a stage where "the elephant may fly or fall to pieces."

Can the elephant standing on the wind fly? In addition to the determination to transform the corporate mechanism, China Mobile, as a traditional operator, also needs to see whether it can generate core competitiveness in the gradually formed 4G Internet ecosystem. There are still many problems that China Mobile needs to solve urgently.

Problem 1: How to manage the business value of voice, traffic, and applications?

This is a global problem. In July 2014, the Fortune magazine published the list of the world's top 500 companies. After excluding mergers and acquisitions, the total annual revenue growth of the top 10 telecom operators in the world was only 0.4%. In the first half of the year, China Mobile's net profit was 57.7 billion yuan, a year-on-year decrease of 8.5%. This has been a decline for four consecutive quarters. The telecom operation industry has obviously entered a period of transformation. All operators are facing the same problem when entering the 4G transformation period. With the sharp decline in voice and SMS revenue, the coexistence of 2G, 3G, and 4G business models, and the lack of a new model for traffic management, how can they achieve traffic management of new businesses and retain the value of old businesses?

The approach taken by the US operator Verizon is: 1. Innovate traffic marketing methods, refine the design of tariffs, and promote the continuous growth of traffic value - first cancel the unlimited traffic model in the 3G era, allow multiple terminals to share traffic, and limit low-traffic users from excessively occupying resources; 2. Make voice and SMS tariffs implicit to retain the value of declining services - Verizon provides "unlimited voice and SMS limited traffic" services, presenting voice billing methods in another way; 3. Focus on high-value traffic products and increase user traffic - 4G applications for individual users mainly focus on streaming video, cloud storage services and other fields. The environment that China Mobile has to deal with is more complex than Verizon, which requires China Mobile to adopt a smarter solution.

Problem 2: How to leverage the huge dividends of 800 million users?

In 2014, the total number of China Mobile users exceeded 800 million. The user dividend helped China Mobile establish an unbreakable leadership position in the 2G era. At that time, voice, SMS, ringback tone and other services all relied on the value of user dividends to develop rapidly and form a huge market. However, when the OTT business counterattacked China Mobile, the 800 million user dividend gradually became less valuable, because the three giants such as BAT monopolized the entrance of traffic and even the remaining long-tail traffic. Users did not need to consume any content-related services on China Mobile, which created obstacles for China Mobile to achieve the transformation of 4G Internet.

At the same time, after the cancellation of the three major customer brands, China Mobile launched the "and" business main brand to manage 800 million users. However, the customer value originally belonging to the three major brands has not been smoothly transferred to the new business main brand, including the customer service standards that China Mobile has always been proud of, which are gradually declining due to the impact of electronic channels. However, the stock value of 800 million users is still very huge, and the user's mobile Internet usage habits are gradually forming and extending to low-tier cities. How to activate the value of 800 million stock users in the mobile Internet era is also the most urgent problem that China Mobile needs to solve.

Problem 3: How to realize the monetization of China Mobile’s big data?

There is a saying that "data is an asset". China Mobile, which has 800 million users' big data, may become a goose that lays golden eggs in the big data era. "Data becomes an asset" is a capital manifestation of the ubiquitous Internet, which makes the role of the Internet not only limited to applications and services themselves, but also has inherent "financial" value. The function of data is no longer just a product reflected in the "use value", but has become a real "value".

Operators have two types of data: 1) "communication network monitoring data"; 2) "a large amount of user data" (including basic data and behavioral data). The real-name system makes these data more accurate. At present, the challenges of operators in applying big data are concentrated in three aspects: 1) external supervision; 2) lack of internal big data analysis and mining capabilities; 3) lack of experience in data asset monetization. In fact, operators' big data is more accurate than that of mobile Internet companies. China Mobile has also been exploring the use of big data to achieve precision marketing on its internal marketing platform, trying to find a model for big data monetization.

Problem 4: How to manage content well and realize traffic monetization?

An operator insider once pointed out in an internal training session that China Mobile's traffic is unlimited. In fact, this person made a conceptual substitution. China Mobile has unlimited traffic at the physical level, but the actual content traffic that can be monetized is still in the hands of mobile Internet giants such as BAT. Although China Mobile claims that its traffic is unlimited, it actually lacks content support. Unlimited traffic has no possibility of being monetized at all, because without a product ecosystem, capability access is just empty talk.

Migu Company, the Internet companies to be established, and even the Internet of Things companies and other industry companies are precisely responsible for creating China Mobile's digital content. The release of three new mobile phones is also a reverse substitution thinking mode for OTT business.

In terms of content management, after integrating the five major base businesses, China Mobile's Migu Company has become a giant with an annual revenue of nearly 20 billion. Since the ringback tone era, China Mobile has been one of the most standardized companies in China in purchasing copyrighted content, which also provides the possibility for China Mobile Migu to monopolize high-quality copyrighted content including music, video, games, reading and animation in the future. However, since China Mobile itself does not produce content, how to distribute such a large amount of copyrighted content and realize value-added, and how to explore the possibility of producing content (such as shooting movies, TV series, and making games) in addition to purchasing content, these are the problems that China Mobile needs to focus on in order to do a good job in content management and realize traffic monetization.

Problem 5: How to promote O2O transformation of online and offline channels?

China Mobile has 1 million offline business halls, more than 200,000 call center seats, and more than 10 million electronic channel users. More importantly, China Mobile also has a channel for purchasing small amounts of phone bills that mobile Internet companies covet. In the past, these channels only played the role of paying phone bills and handling business. In the 3G era, they barely added the function of selling mobile phones. In recent years, China Mobile has been using an advertising slogan "Buy mobile phones from China Mobile" to strengthen the sales function of China Mobile's service channels. The number of China Mobile's offline channels and the areas they cover are unmatched by other companies. Therefore, how to amplify the sales diversion function of China Mobile's online channels in addition to terminals for digital content, while expanding the content display function of offline channels, the sales and display of content derivatives, and strengthening the function of small amount payment of phone bills, so that users can instantly obtain digital content or physical goods through the O2O model, is an important issue in realizing the value-added of China Mobile's channels.

Problem 6: How to balance the interests of new media companies and provincial and municipal companies?

New Media Group Co., Ltd. is positioned as a professional subsidiary integrating product provision, operation and service in the field of digital content. It is the only operating entity of China Mobile's music, video, reading, game and animation digital content business sectors. According to the principle of centralized operation, provinces, professional companies and directly affiliated units cannot independently carry out business operations in the fields of music, video, reading, game and animation, and cannot independently cooperate with third-party businesses in the above fields, or provide billing services for the above fields. New Media Group Co., Ltd. and provincial companies adopt a market-based settlement mechanism. The income from monthly information fees for existing users maintains the existing model, that is, the income of provincial companies remains unchanged. New information fees are settled using the "provincial company: new media group company = 15:85" model.

Due to the KPI assessment model that China Mobile has always adhered to, during the current period of rapid growth in 4G terminals and tariff packages, the conflicts between new media companies or other vertical companies and provincial and municipal companies should not be exposed. However, when 4G development is saturated and 4G sales are weak, and there is an urgent need to improve the revenue indicators of provincial and municipal companies through content management, how to balance the interests between provincial and municipal companies that lack the right to operate content business and new media companies is the difficult problem that China Mobile needs to solve.

Problem 7: How to break through the emerging industries and promote the development of new traffic application scenarios?

The last problem is also the mountain that all mobile Internet companies are trying to conquer. Zhang Xiaolong said in the latest WeChat public class that WeChat will continue to explore new traffic scenarios in the future. As the network speed becomes faster and faster, content and information really begin to flow in a "streaming" way. In the past 2G and even 3G era, content and information were relatively static, and the application scenarios were relatively fixed. Now the content is more stored in the cloud, moving with people's movement. The terminals that receive content have expanded from relatively simple terminals such as TVs, computers, and mobile phones to cars, smart homes, wearable devices, and even smart cups and chopsticks... The application scenarios of 4G have not been fully explored and applied on a large scale by Internet companies. This is also an important opportunity for China Mobile to seize traffic entrances other than mobile phone screens.

The Lingxi business of China Mobile's Internet base has been exploring application scenarios for voice traffic. Before Migu transformed into a new media company, it also developed a terminal for commercial music application scenarios such as the "Migu Environmental Music Box". China Mobile's "He Jiayu" is a box that not only contains video entertainment but also various smart home applications such as health care, security, etc. All of these are attempts by China Mobile to break through emerging industries and explore new traffic application scenarios. How to grasp the direction of the upcoming scene era is another difficult problem that China Mobile urgently needs to solve.

"Rebuilding a China Mobile". China Mobile, the slow-moving elephant in the 3G era, has made up its mind to cut its braids and resolutely stand at the forefront of the 4G mobile Internet. Can it still fly? Perhaps, it is only one step away.

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.