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China Telecom's Instant Messenger Competes with MSN QQ

VIM formally commercial next year

VIM is a newly developed instant messenger software developed by China Telecom that is currently in a testing phase and expected to go commercial next year.

China Telecom is developing the software in the hope that people will use it to make phone calls, transfer files, and start net meetings.

China Telecom calls its instant messenger software Vnet Messenger (VIM). The Chinese name for VIM has not yet been decided. VIM was developed by Guangdong telecom (a branch of China Telecom in Guangdong Province). VIM is at the testing phase now and is expected to be formally commercial next year.

In China Telecom's commercial plan, VIM is not just instant messenger software, but also a value-added platform that will attract Virtual Service Providers (VSPs). According to experts from China Telecom, VIM will focus on entertainment services such as online games and mobile phone rings downloads.

China Telecom is doing its best to build the whole "industry link" for VIM software. According to its plan, China Telecom will, "run the platform, provide a value-added application, and be a user terminal on VIM." These will be its three principle aspects.

The task of China Telecom is to develop VIM software and to run the platform for VIM, while other ISPs will provide various value-added services from their professional field. China Telecom will encourage the VSPs to maximize their creativity.

Why did China Telecom develop VIM?

"China Telecom has spent a lot of money on developing VIM," a professional from China Telecom has said. "The reason why it [China Telecom] developed VIM was that China Telecom worried about future impingement from the competition of instant massagers to traditional telephone services. We preferred to design our own instant messenger than to be impinged by other companies' instant messengers," he said.

The worry for China Telecom is reasonable. Telecommunication experts have realized that instant messengers will impinge on traditional telephone services a lot. The overall number of users of MSN and QQ (the No.1 Chinese instant messenger) are very close to the number of telephone users in China today. The effect can be seen in daily living. In today's China, adding a friend onto your contact list you need now to update a telephone number, QQ number and MSN user name, each being just as important contact information.

The natural similarity between instant message service providers and VSPs puts China Telecom under a lot of pressure. A China Telecom professional thinks that the function of the instant messenger is the same as the function of the telephone, as many people already choose to communicate through instant massagers rather than telephones. As long as instant message service providers transform into VSPs, more people will chose instant messengers instead of the more traditional telephone.

In the western world, instant message service providers have already become strong competitors of telecom companies. David Gurle, former manager of Microsoft, expressed his opinion recently that instant message service providers, including Microsoft, AOL, and Yahoo, will combine value-added communication services and Internet service, to become the strongest competitors of telecom companies. In addition, services of Microsoft, AOL, and Yahoo are worldwide, while the services of telecom companies are restricted by geography. In Japan, Yahoo BB have not only made a great success of online gaming, but have also combined IP telephone services to become the strongest competitor of NTT (a Japanese telecom company), although cabling of Yahoo BB are rented from NTT.

In China, the future VSPs are itching to try. Between August and October, the Ministry of Information Industry organized experts to assess the qualification of value-added service providers and begin to discuss the release of the value-added service license. Many people believe that the Ministry of Information Industry will soon admit VSPs and allow them to carry out their services. According to the rules of the WTO, for foreign enterprises that desire to enter the China telecom market, entering the value-added service field will be easier than entering the traditional telecom field.

Therefore, China Telecom wants to have its own instant message system. In the commercial plans of China Telecom, VIM will be combined with a fixed telephone service, email services, and the future 3G services to form an outstanding individual communication platform to compete with ambitious VSPs.

Aircraft carrier vs. sampan

China Telecom will be a great threat to future VSPs. It won't let profit of the virtual services market be earned by VSPs so easily.

If China Telecom changes its policies suddenly, the future VSPs will lose a lot of profit. A value-added service provider said, "The competition between China Telecom and VSPs is like the competition between an aircraft carrier and a sampan."

However, experts of China Telecom do not think China Telecom wants to monopolize the virtual services market. They said, "'Carrying out virtual services' and 'becoming VSPs are two different things, because China Telecom has its own cables and networks, and because traditional telephone services will also still play an important role in China Telecom. Therefore, China Telecom will still be a telecom company rather than a VSP." 

After everyone develops virtual services

Many China value-added service providers are trying virtual services such as Honglian95, Runxun, Zhongqi Networks, who have already got their license for commercial experimenting in the area. A telecom expert thinks that MSN and Tencent (the No.1 Chinese instant message company, which designed the No.1 Chinese instant messenger, QQ) are very close to VSPs now. MSN and QQ have so many users, so once MSN and Tencent transform into VSPs, they will be much stronger than any other value-added service providers, and likely to become the strongest competitor to China Telecom.

Tencent has released the enterprise version of QQ. Many people regard QQ as an entertainment tool, so it will be very difficult for Tencent to succeed in the serious enterprise level market. But the real aim of Tencent is obvious: providing virtual services through an enterprise version of QQ. Some telecom experts guess that the enterprise version of MSN will be released sooner or latter.

A value-added service provider thinks that VSPs have to face a lot of difficulties besides threats from China Telecom.

First, today, all VSPs hope that the Chinese government will make policies that will benefit them, but doubt that the policies will really do so.

Second, the software & hardware upgrades and cable rent will require a lot of money. In addition, too many value-added service providers and ISPs are participating in competition. At least 3000 value-added service providers and hundreds of ISPs, many foreign value-added service providers and potential competitors, will make the virtual services market extremely competitive.

(China.org.cn by Wang Sining and Daragh Moller December 12, 2003)

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