China's mobile giants squeezing smaller players

End of easy pickings for value added service providers

Simon Burns in Taipei, vnunet.com 13 Jun 2006

China's largest mobile telecoms service providers are expanding into new markets and cutting into the business of smaller players such as Tencent, Tom Online and Linktone, according to China-based market watchers.

As subscriber growth in China's mobile market begins to slow, giant firms like China Mobile and China Unicom are no longer content to focus purely on adding mobile users while leaving lucrative niches like wireless messaging to value-added providers.

China Mobile is no longer renewing some contracts with companies that use its network for instant messaging and other services, Interfax reported last week, and is introducing its own IM service.

China Unicom, the country's second largest mobile phone service provider, began to take similar action recently.

Tencent operates a variety of services related to its QQ messaging software. The basic QQ software is similar in function and appearance to desktop messaging applications like ICQ, MSN Messenger and Google Talk.

The great popularity of the original QQ program for PCs helped it become the most popular messaging software on mobile phones as well.

Unlike the PC-based version of QQ, the mobile QQ and mobile chat services are not free. Subscribers pay a basic charge of at least $0.50 per month.

Tencent QQ is China's most popular IM service, according to various sources. The company claims an active user base of over 220 million, with up to 20 million users online simultaneously during peak hours.

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