China’s Ministry of Industry and Information Technology (MIIT) is pressuring Tencent to subsidize telcos in China for supporting the huge data demands of WeChat’s user base. There are a total of 300 million WeChat users globally and 260 million residing in China. According to Chinese authorities, either Tencent or its users has to foot the bill. But Tencent president, Martin Lau, confirmed over the weekend that WeChat will remain free to users. Good news for users, at least for now.
I find this whole subsidizing the telcos fiasco ridiculous simply because users have actually paid or will be paying for their data packages when using any mobile service. Whether the app is used frequently or not, users shouldn’t be footing an extra bill for data just because the app is popular or uses more data in relative terms than other apps.
While it is assuring to hear from Tencent that it will not be charging users, the Shenzhen-based company can’t stop telecoms firms from jacking up their data packages (which is okay in a free market). Sure, there are other telcos in China that users can switch to. But make no mistake that they are equally unhappy with their shrinking revenue from SMS – and heavy data traffic – because of WeChat. So it is possible that the telcos may gang up to fight against WeChat. Of course, telcos have vested interests and run their own similar messaging apps – China Mobile has Fetion, for example – so there’s an element of preserving their own OTT offerings.
If Tencent is forced to subsidize the telcos to keep WeChat running, then Sina Weibo and other popular social apps out there will be pressured to do the same. If the big boys are facing such crap in China, imagine it happening to a startup whose app got really big but couldn’t grow because the mobile telcos demand a subsidy to keep it running. Tencent, as China’s biggest web company, is probably big enough to get through this. But a bootstrappy startup is likely to be crushed by the demands. It will be tragic for startups in China if that ever happened. And that is why I’m rooting for Tencent to win this battle against MIIT and the telcos – just so WeChat will not be used as a case study of how it is OK for a popular app to subsidize the mobile networks.
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