China Mobile and China Unicom Agree WeChat is a Threat, But Can’t Agree on How to Fix It

Tencent is not a well-liked company at any of China’s major telecoms. First there was QQ, the instant messaging service that used massive amounts of 2G network bandwidth and kept users away from heavier text messaging habits, and now there’s WeChat, which is costing telecoms even more in bandwidth even as it threatens their telephone services with its voice and video chatting features.

According to Telecommunications Industry Net, China’s Ministry of Industry and Information Technology (MIIT) recently held a closed meeting to discuss telecom operator subsidies to help the companies cope with the cost of Over-The-Top (OTT) services like Tencent’s WeChat. China Mobile and China Unicom reportedly both sent representatives to the meeting, but apparently were unable to agree on a path forward.

The dispute apparently centers around China Unicom’s concern that large subsidies would provide a greater benefit to China Mobile, increasing that company’s competitive advantage. With its relatively smaller network, China Unicom is less affected by the massive bandwidth WeChat users eat up, and apparently that’s enough reason for Unicom to be opposed to high subsidies.

In the long term, it remains to be seen how China’s regulators and telecom industry will handle WeChat’s growing user base and the bandwidth it eats up. In fairness to Tencent, WeChat is also probably driving some customers to upgrade to 3G wireless subscriptions so that they can do voice and video chat from anywhere, but even so, telecom operators will need to find a way to deal with the way that OTT services like WeChat leach customers away from their own more profitable telephone and SMS messaging services.

(Telecommunications Industry Net via Sina Tech, image source)