Today I was on a panel at a JETRO conference with Hong Liang Lu. He has some amazing numbers about telephones China. Chinese are buying 90M new mobile phones a year. (Compared to 80M total mobile phones in Japan.) Japanese are about to make pre-paid mobile phone illegal because they are being used in crime. 80% of Chinese cell phones are pre-paid because of collection issues. PHS (Personal Handy Phone) which was developed in Japan (and I thought was a dead standard) is heavily deployed in China with 70M subscribers vs. only 5M subscribers in Japan. Minutes are as cheap as 1 cent per minute in China. China has 300M land-line phones and 300M mobile phones now.

I knew telecom was going crazy in China, and many of you may know these numbers, but they are stunning none the less.

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I recently blogged about a SIM card vending machine here in Hong Kong that sold SIM cards (GSM and CDMA) for HK and China in a manner as easy as buying a stick of gum. The Chinese telcom revolution, being led by mobile, is pretty amazing, but they still don't sit around and text message like some of the Japanese school girls I saw during my last trip to Tokyo. But with CDMA coming out in more and more places in China, perhaps the non-phone usage will be soaring as well.

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I think what's truly stunning is how badly consumers in Japan are ripped off in this area.

What sort of crime is associated with pre-paid mobile phones? It must be rampant if the Japanese government is planning to outlaw the usage.

Let's talk about markets and innovation: a) what is the Chinese prices and products influence on the worlds markets for cell phones, or for connectivity? b) We are getting more and more wired. What does the Chinese adoption of PHS means to the rest of the world? What about countries outside the G8 or with small wired population: can China (or products based on models already popular in China) capture those?

One thing that is far more common in China than any other country I've visited is the resale of used phones from the West. Plenty of old discarded phones in the West make their way here and are resold to people who want a phone, but cannot afford the latest handset. Here in Hong Kong you sometimes even see the used phone dealers sitting on a bench with a sign scribbled on paper listing prices and inventory for the day. Kind of neat.

In my native Indonesia most people use prepaid cellulars too, both GSM and CDMA. Prepaid cellulars are very convenient. And thanks to (U)SIM mechanism, average handsets are sold and resold many times before retiring. This is the best form of recycle, IMHO. In Japan many good handsets are never resold, instead becoming junk and litters the environment at very early age. Not to mention the waste of earth resource.
Too bad, carriers' business models prevent Japanese handsets to be designed with reusability.

I think pre-paid phones have been used in kidnappings or something. I think banning them is an over-reaction personally.

I think the Philippine micro-payment solution for cell phones will overtake prepaid in some circumstances. The Philippine cell phone companies allow existing cell users to transfer some minutes to others in a micro-payment system. It's done via the phone and IR txfr.

I have heard, in addition to banning phone, they are banning scooters and lightweight motorcycles in 2006 to curb purse-snatching. This is pretty common in China.

Governments and their associated law enforcement departments have high concerns for pre-paid SIM cards since they can be bought and used with complete anonymity in most places. Tracing criminals/terrorists becomes harder if they are constantly changing SIM cards and mobile numbers.

For instance – in the Madrid bombings the culprits were apprehended when the origin of a SIM card in a mobile phone being used as a detonator on an unexploded bomb was traced. If the SIM card had been bought from a vending machine and not been put to use before the bombings, the chances of tracing back to its origins are almost nil.

My opinion is that you can not place a ban on what is a convenience to most people, and something that offers mobile communications to the lower classes.


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