Plagued By Spam Messages, How Could VNOs Make It Out Of The Pit?

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(Chinese Version)

On September 29th, 2015, Seven virtual network operators’ directors have been called to The Ministry of Telecommunications Administration Bureau to discuss the spam issues existing among virtual numbers that start with 170, signifying that even though the industry has been putting immense energy in improving the situations, little changes have been made.

Although in some way the operators didn’t directly cause these issues to happen, still they need to adjust these problems in order to make improvements and eventually, a transformation in business development. Or else they would harm their business as a result and further damage existing brands.

Plagued by spams

Since December in 2013, over 40 virtual network operators had been launched into the market and received relevant license to run their line of business(mobile virtual network). By August 30th, 2015, the number of virtual network users has reached 11.23 million and it’s expected to reach 12 million by the end of the third quarter. However, only a few operators have amassed a user base of over a million. That being said, there’s a huge gap existing between these virtual network operators in terms of scale.

Though the industry is still in its early developmental state, but the reality is still extremely bad for the industry even we consider this factor. Due to the lack of awareness of users and price issues, most operators failed to release numbers of 170 in scale, given the fact that only a few have the capital to invest a huge sum of money in businesses.

Still, even operators with a relatively large user base face spam messages as well when running messaging service as a basic communication service. Spam message makers seem to have targeted virtual network operators naturally from the start, and they are gaining momentum.

According to A World Without Thieves, an association dedicated to fighting against fraud in messages, WeChat got 46 reports on spam messages from numbers start with 170. Also as shown in Tencent’ database, 8.6% of spam phone calls are from them as well, meaning on average 1 out of 12 spam phone calls was made by a number start with 170. Numbers that start with 1705 are the worst, accounting for 99.2% of the 1000 sample spam messages. It’s even fair to say that text messages from these numbers are all spam messages or ads.

A World Without Thieves’ statistics also show that 129,443 numbers in that category had been recorded in Tencent’ database, among which 65,487 of them had been active during the past week. In this case, we can say that one number like these can affect at least 37.7 users. If we take the total number into consideration, which is 12 million, then we could see that the percentage here is rather high, high enough to get the attention of the operators.

Inadequate development approaches lead to the downfall of virtual network

After the real name register policy was launched on September 1st, according to A World Without Thieves, numbers that start with 1705 lost 250 thousand active numbers (before that there were 535,396 ). It indirectly shows that some virtual network operators compromised quality for quantity to boost their business.

China Academy of Telecommunication Research reveals that in 2015 the The Ministry of Telecommunications Administration Bureau had secretly sent agents to test over 20 virtual network operators to see if they were indeed following the real name register policy and that they found that many operators were still allowing people to get phone numbers without registering with an ID card. For example, two Snail Mobile outlets in Zhejiang had a violation rate of 50% while the web portal was 100%.

The poor management of motor-and-bricks outlets, the lack of awareness and the inadequate developmental approaches contribute a lot to this situation, which the operators need to find ways to fix, especially after the pilot period is over.

Low price can be harmful to the business too

When the three major telecom operators in the country are being criticized by their users, some virtual operator lower their fee in order to attract users. Generally they lower the data and calling fee to appeal to users. Some 170 numbers’ minimum fee is less than 10 RMB, without a monthly package fee. As for the data fee, it’s even as cheap as 2 cents for 1MB. Besides that, these newly-emerged operators don’t have enough resource to run the business and have very limited operating experiences.

These factors make these operators criminals’ favorite. Even though on September 1st, 2015, operators have started to require ID cards to register a phone number, people can still get second hand numbers through Taobao or other channels at a low price.

Therefore, some operators’ price strategy is actually making it convenient for criminals to use the virtual network to engage in fraud activities, harming the users and themselves as a result. That’s why virtual network operators should focus on reflecting the impact brought by their low price strategies. In fact, it’s also a reflection on the business model.

It’s still too early to talk about overthrowing the telecom operators

Starting from October 1st, 2015, three major telecom operators will allow users to use the remaining data that they haven’t used up from last month. It’s a policy brought by the battle among different powers. Some think that the emergence of the virtual network operators is a huge contributor of this outcome.

However, it’s still too early to talk about overthrowing the telecom operators. Virtual network operators still lack a larger user base and the virtual network is still plagued by spam messages. This industry as a whole still needs time to development and gather momentum before challenging the traditional telecom operators.

The reality is that the traditional three telecom giants still can’t solve the spam message problem entirely once and for all, let alone the newly-emerged virtual network operators. From this perspective, the first thing we need to do to improve the situation is to change our perception: nothing comes for free and you get what you pay. After all, virtual network industry is not a charity, virtual network operators still need to make profits and they don’t have the money to solve something even traditional giants fail to adjust.

If virtual network operators were to make a transformation, they might as well quit the messaging service as a starter or they can just provide only verification message service and abandon group-messaging service.

[The article is published and edited with authorization from the author @Benshoushe, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at ECHO), working for TMTpost.