China Telecom Corp Ltd, the nation’s biggest fixed line network operator and third-largest mobile service provider, formed a joint venture with Chinese Internet company NetEase Inc on Monday to launch a mobile chatting tool called Yixin.
The move signifies the birth of the world’s first joint venture set up by a telecommunication operator and an Internet company. Analysts pointed out that the convergence between telecom and Internet industries will become a trend, because both parties are trying vigorously to explore business opportunities in the mobile Internet sector.
China Telecom holds 73 percent of shares in the joint venture that is called Zhejiang Yixin Technology Co, while NetEase has the remaining stake. The joint venture has a registered capital of 200 million yuan and is responsible for the development and operation of newly launched mobile messaging application Yixin.
Officials from both China Telecom and Nasdaq-listed NetEase talked about Yixin’s ambition to grab shares from the market’s dominant player, Tencent Holdings Ltd’s WeChat.
In addition to standard features such as push-to-talk voice messages and photo sharing, the biggest difference between Yixin and WeChat is that the former is capable of sending free text and voice messages to any mobile phone users, whether the receivers have installed the Yixin app or not.
William Ding, founder and chief executive officer of NetEase, said, “Wechat can only function between two smartphones via the Internet. We could still message others, thought the receivers don’t install Yinxin app. Besides, we are capable of leaving messages to a fixed-line phone.”
Yixin supports both Apple Inc’s iOS platform and Google Inc’s Android mobile operating system and was available for download from various application stores from Monday.
“I think that it’s kind of monopoly for an instant messaging tool like Wechat not to open its protocol. For example, Yixin and Wechat are not interoperable, and thus people have to install two apps on their phones,” William Ding added.
Tencent said in its earning report last week that its WeChat messaging application had 236 million monthly active users, nearly tripling the number from a year earlier.
Experts said that the instant messaging tools are the most widely used app in China now, with the potential of an increase of hundreds of millions of new users each year.
Now Wechat has got an obvious first-mover advantage, while Yixin also stands its chance since its subscribers can obtain subsidies on Internet access charges from China Telecom and send free short messages via mobile phones.
“If more rivals like Yixin emerge on the mobile messaging sector, customers will finally benefit,” said Xin Haiguang, Internet observer.
Customers also responded actively to the newly launched messaging app. “I will try this new app and recommend it to others if it’s convenient,” said a customer.
“I am willing to try it as long as it’s free of charge,” said another customer.
Quarrels broke out between Chinese telecom carriers and WeChat on profit-split issues at the beginning of this year, signifying increasing conflicts between telecom operators and OTT (Over-The-Top) service providers. But the two sides seemed to reach a consensus to phase out the anger by turning to win-win solutions.
In July, China Unicom (Hong Kong) Ltd’s Guangdong branch joined hands with Tencent to launch the nation’s first subscriber identification module card customized for WeChat.
Ding from NetEase said that amid the wave of mobile Internet, all the Internet and telecom industries were restructuring.
China Mobile Ltd, the nation’s largest telecom operator, launched mobile messaging application Jego in June but suspended the service three weeks later.
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