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WeChat deal will help Unicom grow market

By Chen Yongdong (Global Times)

08:51, July 31, 2013

Chinese Internet giant Tencent will collaborate with the Guangdong branch of China Unicom, the country's second largest telecom operator, to launch a new SIM card on August 8 for the popular WeChat messaging app, local media reported. The new SIM card will provide WeChat users with a special subscription package and various services such as games and music, with a monthly fee of 36 yuan ($5.87).

The partnership not only marks the first time that an Over-The-Top (OTT) service provider has partnered with a mobile carrier to introduce a SIM card in China, but also shows exactly the right attitude the country's telecom operators should have toward OTT players. Obviously, not every mobile carrier believes that WeChat will affect the telecom business in a negative way.

The rapprochement between Tencent and China Unicom came after months of debate about the threat from WeChat, a popular mobile app designed to bypass telecom operators' networks to send both voice and text messages via the Internet.

Due to the rapid rise in the popularity of WeChat, which got 300 million users within two years of its launch, China Mobile, the country's largest mobile carrier, accused Tencent of hogging its network and stealing its text message business.

The telecom operator even tried to use its government connections to force Tencent to charge a fee to WeChat users and pay additional money for OTT services. Yet the Ministry of Industry and Information Technology (MIIT) finally said in April that it would leave the decision up to Tencent.

Compared to China Mobile, China Unicom has taken a better approach by working with Tencent, which will likely help it expand its market share with OTT services. This kind of win-win strategy is what State-owned telecom operators should follow in a true market economy.

From another perspective, mobile carriers should be grateful to OTT service providers, as their apps have been making mobile Internet plans attractive to an increasing number of users. And this is exactly what the country's mobile carriers want to see.

The author is an associate professor in new media at the Shanghai Theatre Academy.

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