After spending 17 billion yuan on WiFi hotspots – more than $US2.75 billion at the current exchange rate – China Mobile has quit on the rollout and will redirect its spend to LTE.
The reason for the decision, reported in Sohu IT (original in Chinese, here), is simple: the hotspots don't make money. Sohu IT says the hotspots are good at generating traffic, but hopeless at generating income, with an raw ARPU of just 15 yuan ($US2.58) per month .
As LightReading's Robert Clark states in this blog post, that return isn't enough to generate ROI, even with the anticipated network optimisation benefits (from mobile-to-WiFi offload).
“In light of the poor returns from Wi-Fi, China Mobile is going all-out for TD-LTE and has forecast it will have rolled out 500,000 base stations in 300 cities by year-end,” Clark writes.
The Sohu IT report says that in 2013, WLAN traffic accounted for nearly 74 per cent of wireless Internet traffic growth, but contributed less than 2.6 per cent of wireless data revenue. The report notes that the backhaul build for the WiFi network has also helped give China Mobile's base station rollout a kick along, so not all the investment was wasted.
There's no word on the fate of the 4.3 million hotspots installed under the China Mobile program. ®