Peoples rediscovers voice and puts its Edge on hold
With most players focusing on third-generation (3G) data services, China Resources Peoples Telephone seems to be betting against the odds by devoting almost 80 per cent of its investment this year to its 2G voice network.
This 'back-to-basics' investment strategy outlined by management has been seen by some analysts as a retrograde step, after the company had been touting its 2.75G data-focused technology, called Edge, as a major source of growth ahead of its listing last year.
But company founder Michael Leung Kai Hung said the firm was not making a U-turn from its data investment strategy. And despite being one of the two operators without a 3G licence, he refused to be a 3G doomsayer.
'It's not that people don't need 3G. We cannot disregard that 3G will become very popular, but the problem is that for now, there is simply no demand for 3G applications,' said Mr Leung, also executive vice-chairman.
Rival Hutchison Telecom claimed it had about 300,000 3G customers, while SmarTone said it had 17,000. CSL said last month that it had 8,000. Peoples has sold about 25,000 of its Edge (enhanced data GSM environment) phones.
The multimedia-focused service, which features mobile television and streaming video clips, is slower than 3G WCDMA (wideband code-division multiple access) and lacks video-conferencing capability.
'The question that we face is how we can continue to lower costs while increasing value for our customers ... so while we didn't bid for a 3G licence, we have to find some [other technology in the market] to satisfy our customers,' Mr Leung said.
He said that after spending about $76.7 million on Edge so far, Peoples Telephone would allocate $151 million of this year's $200 million capital spending budget to upgrade its voice network.
It plans to spend $115 million on Edge over an unspecified period.
'Our priority now is to invest in traditional voice,' Mr Leung said.
'When there can be no incremental return from any additional Edge investment we've got to put the money to where the market demand is.'
As for 3G, Mr Leung said Peoples Telephone would invest only if the market proved there was demand for a multimedia service that could not be satisfied by Edge.
Operators without a 3G licence can lease capacity from the four 3G licence holders as a mobile virtual network operator.
