Telecom carriers mull charges for WeChat
Updated: 2013-03-21 09:20
WeChat, a mobile chat application launched by Chinese Internet juggernaut Tencent, has taken the country by storm. If you haven't heard of it yet, think of it as a super networking app with the features of Facebook, Twitter, and Instagram all in one, mixed with Skype and a walkie-talkie. But its surging popularity has come much to the dismay of China's telecom operators.
Everyone saw it coming - the ascension to dominance of WeChat or Wexin in Chinese, an online messaging application developed by Chinese Internet giant Tencent.
In fact, 300 million Chinese mobile users actively played a part in it.
But when there are winners, there are also losers. The Ministry of Industry and Information Technology said in a recent report that due to the fast expansion of WeChat users, the short message services (SMS) of China's three telecom carriers saw much slower growth in the first two months this year.
Now the reality has sunk in, China's telecom carriers are ready to respond.
Xi Guohua, vice chairman of China Mobile, said, "There is no doubt that online messaging applications have been riding on the services provided by traditional telecom carriers. This mode of operation can't sustain if it's all free. As to the details of a potential payment scheme, we are still doing research on that."
What the telecom carriers are not happy about, in other words, is that Tencent is using their resources to compete against them, and that's not a fair fight.
So now analysts are saying that Tencent now will have to start charging fees to make up for money paid to the carriers.
Zeng Ming, the product director for Tencent Wechat, said, "There are ongoing discussions with some telecom operators. But we are NOT, at this stage, thinking about charging our users."
Its management has been quick to disperse the rumor because that would mean Tencent losing its edge on price, which is now literally zero.
The issue at hand is simple, but difficult to tackle. Consumers want cheap services, Tencent is giving them that, but at the expense of telecom carriers, without whose networks, there wouldn't be WeChat.
"We need to actively protect and help promote new technologies like WeChat. But at the same time, some of the profits need to come back to the telecom operators for network maintenance and building," said Professor Shu Huaying of Beijing University of Posts and Telecommunications.
For Tencent and China's telecom operators, it's an issue of how to share an increasingly growing pie. But any miscalculation on either side may result in a smaller pie.