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Telecom Operators Should Cut Prices Sincerely

Popularity 2Viewed 3283 times 2016-6-7 00:40 |System category:News| disclosed, released, network, percent, service

This May, China’s three major telecom operators, China Mobile, China Unicom and China Telecom, respectively disclosed their annual results of implementing the State-Council-urged initiatives of lowering telecom service prices and racketing up telecommunication speed. Their latest data released show that their net income in 2015 has decreased by 40 billion yuan, and prices for mobile traffic and broadband network usage have shrunk by 30 percent. 


Three operators exclaimed that they have achieved their promises to cut prices in accordance with State Council’s administrative guidance, in that almost every telecom service subscriber has been saved by 2.6 yuan per month last year. However, the public understand the price-cutting results otherwise, with many online comments criticising that the degree of price cutting remain minimal and there is more leeway to further lower prices. 


Sohu.com, a news portal, recently did an investigation by sampling over 22,000 people on their altitude toward the price cut, with 82 percent of them saying they didn’t see much noticeable changes in prices and speed improvement and 88 percent holding that the degree of price cut has been too intangible to look like a PR stunt. 


There, obviously, is a psychologic disparity between what operators claimed to have done and subscribers’ expectation over what operators should have done. The latter wants more price cut, but the former is unwilling to do more. One basic fact is without sincerely cutting their services prices, customers won’t get satisfied. 


One reason to cause the disparity is operators’ introducing of price-cutting initiatives has been more propelled by administrative orders than out of their inner competition to grapple for customers. Honestly speaking, operators’ scant price cut in the past year is merely a reluctant but inevitable response to the government’s prices-slashing advocates. Last year, Premier Li Keying had urged operators more than once to lower service prices and the State Council in May even issued a guidance to explicitly stipulate on how operators should lower service fees while improving infrastructures. Without the intervention of “visible hands”, operators would have little incentive to lower prices, given that they still remain a manipulative status quo in the sector. 


Nevertheless, neglecting ordinary customers’ need and feelings in the process of price cutting will make their brand reputation on the line. With their telecom expenses growing rapidly, being saved by 2.6 yuan is indeed no big deal to customers. When little has been done for the sake of benefiting customers, major operators opt to exaggerate their achievements rather than confess their work ineffectiveness in this regard, customers won’t buy their beautiful rhetoric.  Also, most of the so-called 40 billion yuan net profit shrinkage is not created by their price cut but the plunging usage of short message services thanks to the popularity of WeChat. 


Without sincere price cuts, ordinary customer won’t get satisfied.  Their dissatisfaction with operators price-cutting results not only can’t be defined as greediness for more compromises with the help of government intervention, but also reflects one pending trend: consumers are becoming increasingly picky with a strong awareness of defending their own rights. Just one decade ago, when telecom industry was in thrive, consumers had little saying in negotiating prices with the operators, but now they can and will. Since they have known that successful price cutting has been achieved in the past year and there is considerable room to further lower prices,  their stronger will to bargain more favourable prices can’t be underestimated.


To narrow down the disparity between supply side and consumption side, operators should offer noticeable price cuts sincerely. As the market changes fast, especially with exterior rivals like the Tencent Company and Alibaba Group closely eyeing for newborn opportunities in the sector, operators should have realised the bad consequences if they don’t act timely. Ignoring improving their services and continuing to rely on the old-fashioned profit mode, dubbed “making easy money by lying on bed”, only means digging their own graves, which has already been proved by that the popularity of WeChat had almost stifled one of their cash-cow businesses, short text message. 


It is high time for major operators to show their willingness to continue to cut prices and better their service on one hand, and on the other hand,  hammering out a measurable roadmap to achieve these goals should be high on agenda. More importantly, the government should introduce new players via deeper reform in this sector.  When customers have more choices and can vote by their feet, major operators will really hunker down to treat customers seriously.  Fortunately, the introduction of a fourth telecom operator this May will bring in some new blood in this market, let’s wait and see. 


(Opinions of the writer in this blog don't represent those of China Daily.)


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Reply Report voice_cd 2016-6-8 09:22
Thank you very much!!! we have highlighted your blog.
Reply Report samlam 2016-6-8 14:34
Yes. Many prices should be cut down, but they won't. The oil price in China is almost double of the average price in many countries. It still enjoys its glory there.

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