Almost 600 million mobile users, a major restructuring of the country's mobile sector - and the Olympic Games. How on earth will China cope? Peter Collingwood, Vice-President, JDSU's Communications Test & Measurement business segment, EMEA, offers some answers.
With the Beijing Olympics fast approaching, one of the main issues being debated by the mobile industry is just how Chinese mobile network operators are planning to accommodate for the explosion in mobile usage. Due to the sheer number of roaming visitors accessing services during the event, the demand on existing networks will be immense. Peter Collingwood, Vice-President, JDSU's Communications Test & Measurement business segment, EMEA, reviews the market and introduces us to JDSU's approach.
At first glance mobile penetration in China seems low when compared with Western Europe; only four in ten of the Chinese population own a mobile phone. However, this represents a significant number of subscribers due to the population density. Currently there are over 583.5 million active mobile phone users in China, making mobile communications a US$105 billion industry. Most of this revenue is split between the two main Chinese operators; China Mobile Communications Corporation (China Mobile or CMCC) which is the world's largest mobile phone operator with 399.6 million subscribers. China Unicom follows with 125.4 million customers.
In addition - and potentially compounding this issue - the Chinese telecommunications industry itself is currently in a state of flux. The sector is undergoing major consolidation that will see the six biggest telecom players in the country merge into three competing companies. While the timeline for the consolidation is yet to be determined, once it is completed, the newly merged companies will offer fixed, mobile, broadband and future telecom services and will each be awarded third-generation wireless licences. Services delivered via 3G are already commonplace in many geographies and give mobile users access to high-speed Internet and data services. As most visiting mobile users will already be accustomed to these services in their home countries, they will expect a similar level of service when they visit the Olympics. However, as China's 3G services rollouts are still underway, foreign operators can naturally conclude that any of their customers who will be roaming onto Chinese networks may encounter problems and should be preparing to avoid these issues where possible.
To date China Mobile has pioneered and concentrated its 3G arrangements through a locally produced standard called Time Division Synchronous Code Division Multiple Access (TD-SCDMA). Although TD-SCDMA is recognised by the International Telecommunication Union, the standard sits separately from Europe's Wideband CDMA and North America CDMA 2000. This lack of compatibility will affect visitors at the games as they will automatically be shifted across to EDGE, a 2.5G technology offering much slower connection speeds.
This should, of course, be of great concern to foreign operators. Today's mobile industry is inherently user-led; users have the market power and are increasingly cognisant of this fact. They are used to, and therefore expect, an excellent quality of experience whatever their location, 24/7. In addition, users are aware of the increased voice and data prices when traveling abroad and, as a result, they expect their service to be at least of a similar quality to that they receive at home.
Operators must endeavour to meet this demand. Not only does a large proportion of an operator's revenue originate from roaming charges but also they will risk losing revenue through customer churn if the user suffers impaired or insufficient service whilst traveling. Regardless of where the customer may be the operator must take responsibility for the user experience.
This could present a serious headache for operators as more than half a million mobile users travel to the games, including 500,000 visitors, 10,708 athletes, 70,000 volunteers, 17,600 press and 4,000 staff. Mobile communications activity among these travelers will be intense as they share their experience with friends, family and business associates in their home country. Poor quality of service will certainly have a detrimental impact on their trip and, significantly, on their opinion of their service provider. Mobile operators should never assume that when their customers roam in another country the switch will occur seamlessly - roaming outside a home country is only offered as a best effort service. This is the home operator's responsibility to fix.
With a significant proportion of revenue earned from the delivery of roaming services it is certainly in their best interest to ensure that the end-user has the best possible quality of service. In terms of anticipated obstacles, there are usually two issues at play that can negatively affect the quality of service. Firstly, there are the generic problems that can also impact users at home, such as network congestion and patchy coverage. Secondly, there are the issues inherent to roaming. New networks must be traversed with up to four different networks being involved as call routes between countries. In addition, there is the burden imposed on the foreign network operator; they have to identify the requirements of the roamer, their identity, the services they are contracted to and what exact services they need. All of these variables increase the chances of problems occurring.
So, how can mobile operators plan for and, most importantly, overcome these potential issues? An option that JDSU has made available is the ability to constantly check the user experience which, to a certain extent, puts the operator back in the control seat. However skilled the operator, it is impossible to solve a problem without knowing what it is. Being aware which areas and networks are offering poor service means that operators are able to check their SLAs and proactively rectify the problems before they encumber the user, ensuring that their customers have the best service possible.
With this in mind, JDSU has designed a purpose-built managed service assurance solution for wireless network operators whose customers will be roaming to Beijing during the games. Called RoamerNet, the solution has probes in the seven Olympic cities: Hong Kong, Beijing, Shanghai, Qinhuangdao, Tianjin, Shenyang, and Qingdao and is able to test the level of service the customer is receiving on a continual basis. This is done through executing calls, attempting features, transferring files, opening web pages and conducting other actions to gather measurements, including completion success rate, throughput, error rates and latency on voice, messaging, data and video services. This ensures that the wireless operators can always know the service performance at the main venues. The solution is already used by operators based in North America, Europe and Asia.
Ultimately, the goal of every wireless operator is consistent network quality, no matter where the subscriber is located. It is estimated that it costs the average mobile operator approximately US$300 to acquire every individual customer - and in today's competitive environment it is an undeniable fact that revenue is derived from customer maintenance and add-on services. For this to be guaranteed the customer must experience strong and consistent quality of service. It has already been established that visitors at the Beijing Olympics will be have to put up with significantly slower Internet connections than they are used to. Rather than have them purchase a new phone which uses China's home-grown technology, the operator must ensure that these users are experiencing the best service possible.
To ensure this level of loyalty it is critical that every mobile service provider takes responsibility for its customer's quality of service, no matter where the call originates. Without this, the operator risks significant loss of reputation and, crucially, revenue.