4G networks and local content availability driving strong uptake of mobile internet services in China
Mobile data usage trends in China are outpacing many major Western markets and allowing local operators to offset voice declines, according to GSMA Intelligence data.
China is experiencing strong data ARPU growth driven by consumers’ increasing appetite for mobile internet services, which is helping to offset declining voice ARPU. China leads the way in the uptake of IP services when compared to other countries in the BRIC grouping (Brazil, Russia, India and China). Our survey data shows that 79% of Chinese consumers make use of non-operator IP voice and 81% use IP messaging. China’s aggressive 4G rollout and diverse local content are key factors supporting these growth trends.
IP services closing the gap on operator services In China
Use of traditional mobile operator communications services in China remains strong. However, the percentage of consumers using SMS/MMS is only 8 percentage points higher than that for IP messaging apps. Other BRIC countries show much larger variances – for example, in Russia there is a 56 percentage point gap between the different types of messaging platforms. A similar result can be seen between operator and non-operator voice services: use of operator voice services are 56 percentage points higher than non-operator voice services in Brazil, but only 1 percentage point higher in China.
China outpaces developed markets in mobile data services uptake
The Chinese market is more advanced than some developed markets in regards to consumer uptake of mobile data services. In the UK, for example, 43% of respondents accessed social media services over mobile (Ofcom survey data); this compares to 73% in China. Meanwhile, 40% of UK respondents use IP messaging apps, compared to 81% in China. The significantly higher uptake in the Chinese market is present across the vast majority of mobile data services surveyed (see chart).
Chinese operators have benefited from these usage trends in the form of increasing data ARPU. GSMA Intelligence data shows that Chinese data ARPU increased by 32.3% year-on-year in Q2 2015, compared to a 16.9% increase in the UK. The increase is occurring in conjunction with a decline in voice ARPU. Our data shows a 19.2% decline year-on-year over the same period for China and a corresponding 8.2% decline for the UK. However, rising data ARPU has recently been robust enough to offset declining voice ARPU in both markets: blended ARPU for China and the UK showed positive year-on-year growth rates of 1.4% and 2.2% respectively in Q3 2015. In its H1 2015 interim results, China Mobile noted that it had “achieved [a] notable increase in data traffic operations and transition from voice-centric to data-centric operations”.
Demand and supply sides driving move to data-centric operations in china
The transition from voice to data is occurring across the globe, and developed markets tend to be ahead of their developing counterparts. However, in China it is happening at an accelerated rate. Alongside IP messaging and social media, respondents to our survey in China also demonstrated strong uptake of other mobile data services such as gaming, apps and video. The ability to access a wide array of mobile data services in China – enabled by the country’s rapid rollout of 4G networks and supported by strong local content players, (such as QQ messenger) – is creating demand- and supply-side drivers that Chinese operators are exploiting. This is in contrast to the UK, for instance, where 4G rollout has been slower, there is less of a homegrown content ecosystem and stronger competition exists from cable and DSL-based services.
There are recent signs that competitive and regulatory pressure in China could be slowing mobile data revenue growth in the country. However, with strong demand set to continue as more people migrate to mobile internet services, China is set continue to outperform many Western markets for many quarters to come.
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