China Planning to Levy Charges on OTT Apps – WeChat; Should Telcos Follow Reliance Jio Infocomm ?

WeChat OTT for 3G 4G PhonesAccording to the China Securities Journal, the Ministry of Industry and Information Technology – MIIT was considering the imposition of a fee for WeChat, Tencent’s internet-based chat and messaging system. At present, subscribers pay nothing for Over the Top (OTT) services such as WeChat in themselves, although they do pay the Wireless operators for 3G / 4G data packages necessary to access the services.

Tencent has built a scale with Wechat but has failed to monetize the same meaningfully. Various business models such as advertising exist, but there have also been reports of discussions with both the telecoms operators regarding imposition of a usage fee. Until the last management calls with the Big 3 Telcos and Tencent, the management’s stand was not to charge for OTT Apps.

China Telecom and Unicom view OTT services as examples of content and applications which are encouraging uptake of smartphones and data packages. This in turn was helping drive their overall revenue growth, as additional data revenue is more than enough to offset voice and SMS revenues cannibalized by the OTT operations themselves, particularly given the predominance of bundled packages. China Mobile on the other hand was more vocal about the threat posed by OTT operations such as WeChat. China Mobile is suffering from poor monetisation of Wi-Fi, which contributed 70% of China Mobile’s data volume but only 3% 10% of the wireless data traffic revenue.

In the longer term, it is best for telecom operators facing OTT threats to create of their own OTT platform. This would help re-establish the telco as the primary provider of the customer’s communication needs. India’s PAN India 4G LTE License holder, Reliance Jio Infocomm is already building a Voice & Video App / Network but will be of no use if they don’t make it Bharat Centric. The App can be monetized the same way as Voice / SMS today is with Bundled Offers, Free On-Net, Relevant Ads, LBS Offers, etc.

Leave a Reply

Your email address will not be published. Required fields are marked *