China Mobile, the country's dominant cellular operator, is pushing for a greater share of the mobile value-added service (MVAS) market, the home turf of SPs (service providers) including NASDAQ-listed Sina Corp and Sohu.com.

 

China Mobile, having teamed up with SPs to offer its subscribers MVAS, is positioning itself to compete with them in some business areas.

 

Insiders say China Mobile plans to pre-install its own instant messaging (IM) service, Femoo, on its customized mobile phones in the near future.

 

Femoo enables handset users to chat with other Femoo subscribers, either with a mobile phone or on a PC using an interface similar to MSN messenger and QQ.

 

MSN messenger and QQ will not be available on China Mobile's customized phones, insiders say.

 

QQ, developed by Hong Kong-listed Tencent, is the most popular IM service on the Internet in China. Tencent, which controls about 70 percent of China's IM market, has sought to expand its QQ service to the mobile platform. Femoo could undercut Tencent's push into the mobile IM sector.

 

A search engine jointly developed by China Mobile and Google is also expected to be pre-installed on the customized phones in the second half of this year, confirmation that China Mobile wants to offer MVAS to its customers directly, analysts said.

 

Last month, China Mobile launched a mobile music club to offer one-stop services including music downloads and sharing.

 

The launch of this platform has enabled China Mobile to cooperate with record firms. Previously China Mobile offered such services in partnership with SPs.

 

The mobile giant has amended its revenue-sharing deals with SPs in the past months, potentially dealing a big blow to smaller players.

 

Previously, SPs generally received 85 percent from the sale of MVAS-related products and services such as mobile phone ringtone downloads and short messaging services, with China Mobile taking 15 percent.

 

From September, China Mobile will apply a 50-50 percent revenue-sharing arrangement to a number of MVAS offerings in South China's Guangdong Province, according to media reports.

 

A spokesman for the parent of Hong Kong-listed China Mobile Ltd would not confirm the reports but acknowledged that China Mobile is seeking to diversify its revenue-sharing arrangements.

 

Now China Mobile is applying a 30-70 percent arrangement for some MVAS offerings under which SPs get only 70 percent of the revenue.

 

A 50-50 percent arrangement is applied for some services such as downloads of mobile video clips and its mobile music club.

 

"SPs, which have a partnership with China Mobile, can choose from these three options," said the spokesman, adding that under the 15-85 percent arrangement China Mobile bears costs such as marketing campaigns promoting the services.

 

"We will not scrap the 15-85 percent scheme. Currently a big number of SPs still favour this arrangement."

 

(China Daily August 29, 2006)