An onslaught of companies offering voice calls and text messaging for free over the internet has forced telecommunications network operators to radically rethink their business models.
Increasingly, they are giving away to customers services they have long charged them for – and China is at the forefront of this change.
China Mobile, the world’s largest wireless network operator, has put its best foot forward in an effort to keep up with the times with the international launch on Monday of “Jego”, a voice-over-internet-protocol (VoIP) mobile application that has Microsoft’s Skype squarely in its cross-hairs.
“The industry today is totally different, compared with 30 years ago,” Tiger Lin Zhenhui, chairman and chief executive of Hong Kong-based China Mobile International, said.
“Traditional telecommunications services are being replaced by internet applications.
“In this industry transformation, we have focused on providing mobile communications [through] a voice app. It’s an over-the-top [OTT] business model that meets the overwhelming demand for international direct dial roaming and benefits people with close connections to China.”
OTT refers to a range of online or “value added” services that people use for free over the network of the mobile network services provider to which they subscribe.
Some popular OTT services include Skype, Line, Viber, WhatsApp, KakaoTalk and Tencent’s WeChat. These are available on various mobile operating platforms, such as Apple’s iOS and Google’s Android.
One of China Mobile’s competitors, China Unicom, has teamed up with Tencent to support WeChat, while another, China Telecom, has partnered with NetEase on a competing messaging service called “YiChat”.
Jego, which stood for “just easy to go” during its two-year development at China Mobile, had a soft launch as a messaging app in June this year. It was reportedly suspended after three weeks while the operator fine-tuned the service.
Now available for free outside mainland China on Apple’s online App Store and on Google Play, Jego allows offshore users to rent a China Mobile phone number to receive unlimited free mobile or fixed-line phone calls from the mainland and make international calls to anywhere in the world using that number for as little as US$4.99 (about HK$38) a month.
Jego can also be used to rent a Hong Kong number to receive unlimited free calls for US$2.99 a month. China Mobile’s Hong Kong subsidiary runs 2G, 3G and 4G services in the city.
Chinese travellers overseas who already have a China Mobile number can use Jego to enjoy free roaming on incoming calls.
Users can also send text messages, share photos and make video calls within the app at no extra charge.
“In the past, if people wanted to continue using their Chinese numbers overseas, they had to carry an extra SIM card and pay high roaming tariffs,” Lin said.
“Jego provides a cost-effective solution while allowing us to grow our international retail business.”
The service covers about 15 markets, including countries across North America and Southeast Asia.
That is fewer than the 60 markets covered by Skype, but the Microsoft service is subject to tight regulatory restrictions on VoIP calls on the mainland.
“Jego can be considered a revolutionised version of Skype. It offers higher-quality calls at lower cost,” John Jiang, the chief technical officer at China Mobile International, said. “Skype users should join the revolution.”
Ricky Lai, a research analyst at Guotai Junan International, said China Mobile was taking “a calculated risk in providing its voice services on a cloud platform, because voice still contributes more than 50 per cent to its annual revenue”.
China Mobile posted 560.41 billion yuan (HK$708.9 billion) in revenue last year, of which 368.02 billion yuan was generated by voice services.
“Cloud computing” refers to buying, leasing, selling or distributing a range of digital resources over the internet as an on-demand service, like electricity from a power grid.
But Jiang said China Mobile has the broad infrastructure, large user base and two-year head start “to make expensive IDD and roaming services a thing of the past”.
He said a “Jego Alliance”, with other mobile and fixed-line operators, was being planned to expand the service.
British firm TruPhone launched in Hong Kong last week its own unique OTT service.
Truphone enables people to have multiple international numbers on a single SIM card, which allows international calls to be treated as local calls. Markets covered include Britain, the United States, Australia and the Netherlands.
Additional reporting by Sophie Yu