BEIJING - China
Mobile, the country's largest mobile-telephone
operator, on Tuesday formally launched an instant
messaging (IM) commercial service under its own
brand and moved to compete in a market dominated
by Microsoft's MSN division and Hong Kong-listed
Tencent Holding Ltd.
Called Fetion, China
Mobile's IM tool enables mobile-phone users to
chat with other Fetion customers over the mobile
Internet offered by its general packet radio
services (GPRS) network, either with a mobile
handset or a personal computer (PC). The
interface is similar to MSN
Messenger and Tencent's popular QQ. The bet is
big: China Mobile could profit a lot from Fetion,
as long as the country's PC-based IM users go
mobile. Fetion is expected to apply competitive
pressure on MSN and Shenzhen-based Tencent, which
have been seeking to expand their IM services to
the mobile sector.
Microsoft has signed up
more than 9.5 million users for the MSN Messenger
service in China. The number of Tencent Holding
Ltd's QQ IM users has swelled to more than 140
million. If this huge subscription base switches
to mobile-Internet crossover IM tools such as
Fetion, the opportunities could be huge.
Although Tencent and MSN are the
front-runners in the mobile IM sector, China
Mobile still has an upper hand given its
mobile-phone subscription base of 320 million.
With Fetion pre-installed in China Mobile's
customized phones, its appeal is only likely to
grow.
But the biggest advantage China
Mobile enjoys is wireless-industry dominance. In
China, companies like Tencent, known as service
providers (SPs), partner with operators to provide
wireless value-added offerings such as ring-tone
downloads to customers under a revenue-sharing
scheme.
In past years, under a
revenue-sharing model, China Mobile could work
well with SPs as few of their offerings overlap.
But the Fetion launch could force them to compete
head-to-head. And the worst scenario for SPs is
China Mobile taking advantage of its dominance to
put the squeeze on SPs.
In December, China
Mobile announced that it was ceasing its
partnership with Tencent and MSN in the IM
offerings on its mobile platform. Tencent later
agreed to interconnect its mobile QQ users with
Fetion users.
In October, Tencent launched
a lawsuit against Beijing-based MMIM, accusing it
of "unilaterally" interconnecting its mobile IM
service, called PICA, with QQ.
Interconnection benefits smaller players
as it helps boost the subscription base and grow
brand image. That's why MSN has asked for an
interconnection between MSN Messenger and QQ, but
got no response.
So Tencent's favor to
China Mobile has raised industry concerns that the
operator might exploit its dominance.
China Mobile last year started a
pre-commercial trial of the IM service, initially
branded Femoo. By the end of the 11-month trial in
April, it had signed up 20.68 million subscribers,
said company vice president Sha Yuejia.
When using the mobile IM tool, users pay
for the mobile Internet traffic over the GPRS
network. MSN had been charging users an additional
10 yuan (about US$1.30) for the mobile MSN
Messenger, but this year scrapped the fees.
Tencent currently charges 5 yuan a month.
China Mobile said it will not charge the
monthly fees initially and has yet to set a
timetable for future charging.
Mobile-phone maker Motorola said 11 of its
handset models are already pre-installed with
Fetion software. The Fetion IM tool has already
been embedded with downloads of "colorful ring
back tones" and an online shop where subscribers
can buy China Mobile's service offerings and check
phone bills, Sha said.
"We are expecting
to add a number of new offerings such as games and
video phone calls to Fetion," he said.
But
China Mobile's increasing clout in the wireless
sector could also backfire. Its tightened
supervision of independent wireless application
protocol (WAP) websites has drawn much criticism
as many viewed it as an excuse to develop its own
mobile Web portal.
With China Mobile
moving into many nascent markets in which its
partners (SPs) have been operating, it needs to be
careful not to trigger such backlashes. And for
regulators, that's when they might need to step in
to ensure a monopoly is not abused and competition
is fair.
Fetion's launch underlines the
growing convergence of telephone and Internet
networks.
"Any service that can cross over
traditional telephone and Internet networks would
be a very promising application," said Lu Tingjie,
a professor at the Beijing University of Posts and
Telecommunications and a telecom-industry veteran.
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