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Wi-Fi phones might create new markets for business growth

By Sun Xiaofei (China Daily)
Updated: 2009-08-31 16:18

China Mobile's future, on the other hand, looks bleak after neglecting to invest in fixed broadband, which is the foundation of Wi-Fi, and falling behind in the race for market placement, making future investment even more difficult.

In general, telecommunications companies will face a decline in profits, and mobile phone producers will benefit from the new market.

Once mobile phones are installed with the Wi-Fi function, sales of mobile phone producers will drastically increase.

By contrast, telecommunications companies are likely to face a sharp decline in earnings stemming from their 3G access services due to the rapid increase in free Wi-Fi users.

As the number of free Wi-Fi users rapidly increases, telecommunications companies must create a new profit model by developing a variety of profit-making contents.

During the 3G era, telecommunications companies could expect large profits from simple services such as voice mail, text messages and connection fees.

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However, connection fee profits will drastically decline once Wi-Fi becomes available.

Telecommunications companies must attract the interest of potential clients with free Wi-Fi access and then develop services that create a new, profit-making model.

The use of Wi-Fi phones will also act favorably to related businesses. Until now, handsets, chips and basic equipment have all been produced according to the WAPI standard. The Wi-Fi standard will provide a new market for growth.

There will be extensive investments in Wi-Fi hot spots such as main facilities, libraries and coffee shops. Plus, there will be rapid distribution of software that has been developed to accommodate both Wi-Fi and WAPI.

It is absolutely necessary for the Chinese government to assess the gains and losses of adopting an international standard and to create a flexible industrial policy, rather than insisting on maintaining a national standard.

By permitting the use of Wi-Fi, China has opened numerous doors to opportunities for industrial growth, increased exports and foreign investments.

The author is a researcher with Samsung Economic Research Institute (China). The views expressed here are her own.

 

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