Today, after listening to the introduction of Guangdong Company made by Comrade Zhong Ping on behalf of the team, my overall feeling is that the pressure on Guangdong in the first half of this year is relatively large, and the pressure on the Group is also very large. I think there are objective reasons for this: First, China Mobile has obtained a fixed-line license, a great deal of effort in the broadband business, through the bundling of a great deal of influence on us, it so happens that in previous years we in the city, urban and rural areas, townships and above, the fiber optic transformation of the effort is not enough, so it has caused the current pressure. Secondly, China Mobile's 4G license was issued at least four months earlier than ours, affecting us in terms of time competitive advantage.
But in addition to the objective reasons, I personally believe that there are subjective reasons: we are many areas of the leadership team after the adjustment, there is often such a problem, that is, to consider whether it is necessary to "cancel the virtual number". Guangdong is not prominent here, one of our most typical province, said that the previous cumulative 20% is false, to be canceled, the following staff feel that it is not possible to take a break, do not have to go to the development of so much, which led to a decline in market share, the results of the later anxious to catch up with it. It can be said that where this is done, a big slippery slope goes down after it can not come up. In the past, the old saying that "the three armies can not be taken away", that is to say, ambition, momentum, morale can not be lost. The real imaginary number to pin off, I strongly agree, but in turn must be realistic, not because of this to the morale of the loss.
The good thing is that I see that Guangdong from September began to develop in a good direction: first, to promote the transformation of the development mode. The three major carriers are challenged to reduce sales expenses, and mobile, Unicom compared to our pressure is the least, they are more difficult. We in Guangdong are adjusting to change the way of growth, which is very painful, but gradually gradually find the way of development in this situation. The second is to strengthen the channel segmentation. You have divided the channel into six categories, I think it is very good, in the resident network of funds began to cooperate with the community, a very good step forward. Thirdly, the quality of subscribers has gone up. So it is very gratifying to me to see hope in the broader difficulties, and it is the result of the efforts of all cadres and workers in Guangdong.
Specifically, how to do the next step, I mainly say three points:
One, according to local conditions, accelerate the development of
It should be said that in Guangdong, the user of the new market is relatively small, but as the information technology application of the market, the market for consumption, I think the space is still there. For example, from 3G to 4G, the average monthly household traffic rose from 190M to nearly 1G, indicating that consumer demand is still there. Enterprises are the same, and the demand is even greater, the key depends on the way we meet this demand. We only see the sales of 4G cell phones, in fact, there are many other aspects, the main thing is how to release these capabilities. So, there are difficulties in economic growth, our growth rate will be a little lower, but overall the market opportunity is still there, the key depends on how we do.
Within the three, are others growing better than us, and how should we learn from others? China Unicom, the first few years to maintain a sustained high speed growth, is in the case of the two major telecommunications companies powerful forces, to find a specific market. For example, in terms of customer dimension, it has found a relatively decentralized business customers, that is, what we call clustered market, and cut into it very accurately; for example, in the urban and rural areas, we and China Mobile are not too concerned about the market, Unicom went ahead. So we have to be good at identifying the market and getting it really right.
When the Group discussed differentiation a few days ago, the Group's head office thought that the reduction of selling expenses was an opportunity for us to change the way of development. Let's think about it, before there is too much reliance on marketing costs, too much reliance on cell phone subsidies and so on the development mode? Another example is that when we talk about "de-telecomization", many people are actually against this phrase. But look, if there is no telecom channel, our marketing cost will be more tight, telecom channel accounted for 5% or 6% of total sales, how much we save? If we can go to 10%, 20%, how much do we save? And without the decentralization of services on the web lounge, palm lounge, Etsy, Wechat, and the assistance of automated voice around the phone, how much pressure will be put on services as our business grows over the years. In fact, the number of attendants on the 10,000 number across the group is declining year on year, thanks to the internet. These are subtle changes that we don't even realize ourselves.
After these years of changes in the application of information technology in the government and enterprise industry, we have a clear advantage in the vertical market of government and enterprise customers, at least in the three major telecommunications companies. China Mobile is very envious of us, think group customers to take the past is more difficult, which is closely related to our transformation in the first few years. I said the other day that "de-telecomization" is equivalent to the overthrow of the Qing Dynasty, people rode bicycles, cars, and began to brush their teeth, but the pigtails can never be cut, and the waistcoat can never be changed. In fact, they have identified with a lot of advanced things in the West, but mentally they still can not accept it, and this is also the case with our current "de-telecommunication".
China Telecom is all about marketing its business, marketing its two core businesses of broadband and mobile telephony. Now that broadband and China Mobile are becoming more and more homogenized, and it's starting to bundle them, our original bundling tactic doesn't work anymore. But let's think about it, can we rise from "selling business" to "selling products"? What do customers want broadband for, that is, to watch TV, to go on the Internet, the main core here. Of course, in the future, we can also broaden to the gateway intelligence, as well as on the top of the smart home control, and so on. If "Yueme" is successful, we will be different from our competitors in terms of product. Now the SARFT is cracking down on Internet TV and boxes, which is a rare opportunity for China Telecom. Sichuan company through the "0-1-2" (ITV TV free of charge, drive 1 broadband, 2 cell phone), and in the quality of TV and competitors have a huge difference, September cumulative growth rate of 10%. Right now, we are at a disadvantage in the Guangdong market, but it is actually very difficult for other operators to support us, because China Telecom accounts for 60% of the total Internet traffic, China Unicom for 30%, and the rest for 10%. Whoever has the traffic is really controlling the quality. So if we switch to fiber, it's going to be very difficult for our rivals to really compete with us in terms of broadband quality.
Looking at the mobile business as well, we're selling cell phones right now, but we don't see that there's a huge amount of other demand for mobile. China Telecom in the whole network has a security and confidentiality system, and there are a variety of anti-attack capabilities in the network, so can we form their own characteristics in the cell phone market. At the same time, now the cell phone market is no longer just about human-to-human communication, there is also the concept of the Internet of Things. U.S. sensor chips are now as cheap as only five or six cents a chip, so cheap sensor chips and communication chips a combination (of course, the communication chip is not necessarily 4G/3G, may also be WIFI), so the Internet of Things is a very good time. Let's imagine, each car should have at least one of these communication chips, the car on the timely summary of information, and automotive intelligence and road intelligence of one, and the road to how many sensors to really do a good job? There are also logistics, are now using two-dimensional code, because the chip is cheap, the future may be the implantation of a chip, automatically send all kinds of information to a specific place. There is also the aggregation of information from various electrical devices in the smart home, as well as a variety of wearable products around health and medical care, does the transfer of this information require communication? Doesn't it require the aggregation of our comprehensive data? There is also Japan's control of industrial pollution, for example, I went to Japan a few years ago to eat beef, store owners can be very serious through the data, to introduce me to eat the cow's father is who, who is the mother is who, who is the grandfather is who, all the way up to the four generations, it turns out that each cow was born, it will be implanted with a chip with WIFI, to make the identification. These small sensors are essentially related to cell phones, and finally bring us traffic. If we do not dare to do it, naturally someone else dares to do it. Of course, I emphasize here, we do not do the Internet of Things to study the sensor chip, but to do the aggregation of data, the distribution of the platform, these are our strong points.
If the future of mobile business tariffs cheap to a certain extent, our market is not to say that there is no, but to see how we do, can not put the eyes only focus on the people, once the field of vision to open up a little bit, the market abounds, the key is whether we have the ability to do this, who is the aggregator of content who can win the victory. Alibaba is now 21.8 billion U.S. dollars in financing, we all envy him, but if it did not go to Taobao, Tmall, Alipay can have today? We are in the same situation today, business opportunities abound, China Telecom has this opportunity.
Guangdong is a great place with a great people and a great economy, so try to see more, try more, try more, and see how you can seize these opportunities. Of course, the core of innovation in the group headquarters, the main responsibility of the provincial companies is marketing and sales and after-sales service. Personally, I am still optimistic about how to pry the market. We see a lot of cities at the beginning of broadband pressure, to later basically turned back, mainly by the quality. We have difficulties, competitors are more difficult than us, China Mobile is now claiming 40 million 4G users, in fact, the use of the number, card, package through the statistics in, the real 4G cell phone users are not so much. Our entire group of 4G users to yesterday is 3.3 million, of course, inside the real 4G cell phone less than half, but 40 cities only so a few days to achieve such results is not easy, so I do not think that there is too much pressure, to be quiet, really with a bit of thought to cultivate, the development of a user after the development of the application services on the top of the development of a good.
Two, lay a good foundation to improve competitiveness
Guangdong fiber transformation in the urban areas only 20%, you have to speed up the solution, which is our "old business", can not be lost. I just said, because our broadband traffic is the largest, so we through the CDN, the main network to adjust the quality of the space is much larger than other operators. This time we and China Unicom jointly formed a CDN company, through cooperation with the community, greatly improve the quality of our two basic operators, and other Internet companies to compete. In the past, we sold private lines to government and enterprise customers, bought equipment and assembled it through a group of people, but today we are selling "cloud services". In the past, our competitors are actually only two, today is Alibaba and other Internet companies suddenly appeared, we have never felt this kind of pressure. This situation can not be underestimated, Amazon in Ningxia Zhongwei cloud data center is almost built, will soon be involved in small and medium-sized enterprise cloud services, Microsoft in the past is mainly PC, and now also began to enter the vertical market. The most basic of all this is broadband, so we can't afford to have a major loss in the fixed broadband market. Therefore, must be determined in a short period of time inside the city, especially high-grade residential areas, urban and rural areas, enterprises and institutions all complete fiber transformation, to improve our competitiveness.
In the construction of 4G, to seize the key cities, Guangdong is mainly in the Pearl River Delta on this line, western Guangdong and northern Guangdong to engage in a little thin coverage, do not like 3G to cover everywhere, the cost is too big. In the immediate future, we will first do a good job in the areas with voice traffic and big cities. Here to note that the new base station can make do with the first to make do with the next year around the Spring Festival, China Mobile's base station will be all open to the public, so that our base station construction costs can be greatly reduced, this is the "borrowed troops to fight the war", "fetishism". Self-constructed point is also to rent a house, the rent is also very high, we rent a house to directly rent a base station, how much money, how much energy, and now in the city center to find a point is not easy. This is also thanks to the establishment of the tower company, the biggest beneficiary of the establishment of the tower company is China Telecom, because we have the original 800M base station is the least, today is just an opportunity.
Next year's total investment will increase, the whole group will grow by 20%, the bulk of the investment is not to engage in fixed-line, broadband, but to engage in mobile. China Mobile is covering 300 cities this time, but in reality it is estimated to be more than that. Our plan is 100-120 cities to do thick coverage, the rest of the city thin coverage, simple to do a little. Why? Because these 100 cities account for more than 75% of China Telecom's 3G traffic. China Mobile has the money to do that, we China Telecom has no money, if we do it like it will be pulled down, so we should be clear-headed on this issue. Including some cities in western Guangdong and northern Guangdong I just said to do, in the center of the city to engage in a little thin coverage, the main solution to roaming, and there is a little bit of 4G, then the 3G quality is greatly improved, because the traffic is diverted by the 4G, the consumer can not figure out the 3G, 4G, can be used is the main thing. Our 3G, after all, covered the whole country, only five years, some areas covered only two or three years, to play its benefits. In the broadband, that is, FTTH transformation on the "two-legged road": the Group next year, investment will grow by 20%, this piece of capital to use, but only by 20% growth is not enough, must be to the community to capital. Three years ago I said broadband to allow resident network and social joint ventures, Guangdong did, but not big enough, I last went to see the urban villages in Guangdong, the effect is very good, why can not be bigger? In the north, our broadband is a niche market, in a town to find the local rich and powerful people a cooperation, almost all of China Telecom, because he invested the money to have a return, and on the 5 or 10 years, he has to immediately turn into China Telecom's customers to have a profit, we are in the 5-10 years in the income is a piece of the less, but the users and the market are ours. If three years ago we can take this road a little wider, today why so passive, but now it is not too late to squeeze the funds, in Guangdong, Shenzhen, Dongguan, Foshan, Zhuhai and other key cities to speed up the progress of the city center, including the urban and rural areas to dry up. Now the economy is not very good, the city's changes are slightly smaller, so it is the time to scale investment, investment in a piece of the community after the curtailing, the user to fight back, to have the determination to get the quality up to the user to maintain a good. Please Guangdong must fight this battle in the next year, we have pipeline, to do it is very fast, the difficult thing is door-to-door access to change the line, and now there is a lot of experience in this area, so we must find a way to fight this battle well.
Three, intensive operation, improve efficiency
We are now more and more business to the intensive development, but I am more worried, because in the past we are to the development of the region-based, which in the form of fixed-line network is not a problem, but the mobile as well as a lot of new business is still completely rely on the development of the province, the region as a unit will be faced with a lot of challenges.
China Telecom is now the first of the three major carriers to have its subscribers file complaints, basically not in the network, but in marketing and package design, due to too much decentralization, a lot of problems, and group incidents have been occurring in China Telecom. China Unicom has centralized its IT in the last few years, and its tariffs are basically unified across the country. China Mobile has more control than we do, so we've become the most problematic of the three.
Now we have a great ability to "share", how to exploit the loopholes, how the phone how to collusion, how to take your settlement over, this ability is sometimes far greater than the ability to develop users. China Mobile's network quality why so good, that is not our own 31 provinces "underground pipeline" to protect people? Sneaky to provide it with 20G, 50G, 100G bandwidth, very cheap, the region is to earn a little cheaper, but the loss of the network, the essence of the problem is still not enough intensive, so China Mobile all day still laugh at us is not a company.
We come up with a new business every time, not yet studied how the market develops, they sit down to talk about how to "cut the cake", to establish a distribution system, clearing system, to make the IT complex, and finally, "cake" can not be done. In the end, no one cares whether the "cake" can be made bigger or not, and they argue there every day and end up in internal conflict, and there is no telecom company in the world like us. For example, the current "Yueme", I think now is the best time to launch, we hope that through the "Yueme" can stand, establish the brand, through the sale of broadband into selling products, but to support the whole network, because it is actually hanging IPTV, but also OTT, and ultimately gradually. At the same time there are OTT, and eventually gradually transition to OTT, the cost of our network is down, and the whole network to buy program sources is cheaper, and then each province as long as you spend a little bit of money on your local TV program, the efficiency of the whole network is certainly greatly improved. But I'm very worried that this product won't work, not because of the "Yueme" product itself, but because each of our internal provinces think that their own platforms are good, and that the original revenue belongs to me, and that they will end up making their own best products worthless.
If China Telecom can't be united and work together now, it will be broken by others. Now Baidu, Tencent, Ali are in the layout of the "cloud", especially Baidu and Ali, their layout of the cloud is basically divided into two categories: one is for the center of the city's high-quality customers, the need to achieve a very short latency quality assurance, called the "cold database". That is, disaster recovery and backup, where the customer needs to build where to build; in addition, for the delay requirements are not high, all the data is placed in a more distant, very low-cost center. Basically, the whole country, so its competitiveness is far more competitive than our China Telecom. When our original competitors were China Mobile and China Unicom, all three were at about the same level, no problem. Today the situation is different, users are lost in groups, we do not realize, each province is still emphasizing the importance of their own, there is no network-wide chess. So we must be united, theoretically speaking, our competitive advantage over our rivals, our thinking is not backward, Ali's cloud center is "8 + 2", we are now "6 + 2", not we add two cities, we can be the same as him! But if we don't centralize, we're going to die.
Each province feels that which product is not good can give advice, headquarters to improve. I'm also worried that our Beijing "officials" are too far away from the market, so I put all the bases in each province. Guangdong to take the lead, the group centralized, the province first of all itself to concentrate, some business should be put firmly put down, some business needs to be concentrated must be concentrated, especially innovative, Internet business. Group headquarters revenue is finally divided into various provinces, such as headquarters to fight for policy, to take down the inter-network settlement with China Mobile, the final revenue is not all counted in the province?4G up 40 cities, Guangdong has 4, accounting for 10%, some provinces are not convinced, I said that to 3G call volume to determine the 4G pilot cities. So I hope that we can emancipate our minds and work together to make China Telecom bigger, especially in the Internet business.
I have repeatedly said Ali, Baidu, Tencent, if they are also like us, there is a "so-and-so province Ali", "so-and-so province Baidu", long dead. Internet era, people can do, we have to emphasize the particularity, does not make sense. Therefore, we have comments and questions can be raised, we *** with the improvement, but do not form an obstacle. On Tmall China Telecom so many stores, is not decentralized? As if in a sack of potatoes, looking at a complete sack, the mouth of a release, clattering on the ground, each doing their own, who is not big.
Overall, the development of Guangdong's business from the beginning of the year to August is a more difficult period, to September to see a good momentum, the general law, once a good momentum will maintain a steady rise. I hope that under the leadership of the provincial company's team and the *** with the efforts of all cadres and workers in Guangdong, this good momentum will get better and better.
Thank you all!