If China Unicom’s so-called “2I2C” strategy of combining close commercial partnerships with minority investments by internet companies and industry vertical specialists is successful, it could not only serve as a model for 5G development in overseas markets, but also convince regulators in those markets to reverse course on net neutrality.
So says a new report from Strategy Analytics that explores the reality of China Unicom’s new approach and examines the impact of telecom service providers teaming closely with internet partners to offer privileged access to selected internet content and services, including additional payment, and the bundling of telecom and internet service packages.
China Unicom kicked off its 2I2C strategy in Q4 2016, with the aim of collaborating with Internet companies for “innovative targeted marketing”. The China Unicom FAQ (which doesn’t explain what 2I2C stands for) says that Unicom and its internet partners have established differentiated products and development models by sub-dividing market segments and strengthening data traffic operation.
This, says Unicom, “not only enables the company to develop new touch points for customer acquisition and lift the capabilities to drive 4G subscriber and revenue growth at low incremental cost, but also continuously enhances customer value through smart marketing and convenient promotion of consumption upgrade.”
“China Unicom’s 2I2C strategy was born from the urgent need to turn the company around through their ‘reboot’ program, and do things differently ahead of 5G,” said Richard Guppy, director of Strategic Competitor Intelligence at Strategy Analytics and main author of the report. “It tears up the Western rulebook for net neutrality and may lead Western regulators to switch from ‘we don’t do that’ to ‘we may have to do some of that’.”
Phil Kendall, head of Strategy Analytics’ Service Provider Group added that governments need to review how they expect 5G to succeed, with the EU expecting uninterrupted 5G coverage in all urban areas and major roads and railways by 2025. “A 1980s regulatory model of four to five competing network operators lacking cooperation with key verticals in the service layer is not going to deliver that.”
5G plans aside, the investments from internet companies could improve China Unicom’s competitiveness in the 4G market, noted Guang Yang, director of Strategy Analytics’ Service Provider Group. “We expect to see more collaboration between other telecom operators and Internet companies in China also.”