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Can the three major telecom operators in 5G era continue to write market legends?

November 4, 2019

According to reports, as of 21, the three major operators will have all their financial reports in 2018. The data show that the net profit of the three major operators was 149.248 billion yuan last year. By calculation, the average daily earnings are about 409 million yuan. Compared with 2017, the profitability of the three operators in 2018 has been strengthened. In 2017, the average daily earnings of the three companies were about 365 million yuan.

Can the three major telecom operators in 5G era continue to write market legends?

 

The daily profits of the three major telecom operators are astronomical and rising year by year. Moreover, this is achieved by the three major telecom operators in the market environment of increasing speed and lowering fees for several consecutive years. On the one hand, these three major telecom operators have strong profitability, on the other hand, it means that telecom operators have more room for speed-up and fee-reduction. It also highlights that the policy of speed-up and fee-reduction promoted by the state not only conforms to the demands of public opinion, but also keeps the pulse of the market.

 

On March 5, Premier Li Keqiang of the State Council, in his report on government work at the second session of the 13th National People's Congress, pointed out that this year, the average broadband tariff of small and medium-sized enterprises will be reduced by 15% and the average tariff of mobile network traffic will be reduced by more than 20%. The "number-carrying network" will be implemented nationwide and the set-up of packages will be standardized. In addition, Miao Wei, Minister of Industry and Information Technology, also indicated on the "ministerial channel" of the two sessions that this year, a pilot demonstration of gigabit optical fibers will be carried out, which will enable some of the past 70% of the gigabit optical fibers to be transferred to gigabit optical fibers. We will further reduce mobile traffic charges, and unit prices will drop by more than 20% this year, based on a 63% reduction last year. We will reduce the fees of special lines for small and medium-sized enterprises by more than 15%. By the end of the year, all mobile phone users will be able to transfer their numbers freely to the Internet.

 

Speed-up and fee-reduction are both government-led and public opinion-driven. The three major telecom operators are reluctant to increase speed and reduce fees under the guidance of interests, but the nature of ownership determines that they have to respect the policy orientation and the appeal of the people's will. This fact is also highlighted by the fact that the three major telecom operators have made considerable profits under the circumstances of increasing speed and reducing fees. Market participants should not only operate in accordance with the way of market allocation of resources, but also genuinely care about the demands of market demand side.

 

Although the three major telecom operators have formed three-legged market competition, they are of the same origin and have similar fees and package settings. Therefore, consumers lack fairer choices and the three major telecom operators are difficult to get rid of the shadow of monopoly. The key is that the three operators can get more revenue and profit by operating at low network speed and unreasonable cost, but this operation is unsustainable and is not conducive to the upgrading of telecommunication technology.

 

The main body of the market itself can not provide better supply to the telecommunication market. It can only rely on Policy-Oriented supply-side reform to promote the main body of the market to move forward in the right direction of the market, updating a supply side of the telecommunication market that meets the market expectations and enhances the competitiveness of both domestic and overseas markets.

​China will launch 5G commercial pilot projects in key cities this year, and the three major operators will also open 5G network locations, with 5G commercial fully landed in the year. Global competition around 5G technology, equipment and "intelligent +" on this basis has been fierce, even resulting in a wider range of big country games. 5G technology has not yet been fully commercialized, and 6G research has been launched in the United States. Thus, the era of artificial intelligence has officially begun. Telecommunication technology is no longer a simple communication carrier and a simple industry derived from it, but a large data platform and carrier supporting the entire intelligent industry.