Porn Crackdown Sees China Mobile Suspend WAP Services: 10 Million Yuan Loss a Day

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The recent crack down on mobile Internet pornographic content has forced China Mobile, China's largest mobile operator, to suspend all of its WAP billing, resulting in losses of 10 million yuan per day.

 

In order to fully disassociate itself from cell phone pornographic websites, China Mobile has announced it will suspend charges from its business partners, such as for WAP (Wireless Application Protocol, providing Internet content and value-added services to mobile terminals), and undertake a comprehensive clearing. This is the second clearance of China Mobile since the "second confirmation" of the SP policy issued in 2006.

 

SP and WAP websites and ad networks right now are on pins and needles. SP insiders say China Mobile's action indeed wipes out cell phone pornographic sites but also deals a staggering blow to the whole industry chain.

 

Cell phone pornographic websites make money through chains of subcontracting. Some service providers subcontract to another layer after signing network service fee contracts, and each layer is open to be taken advantage of by pornographic websites.

 

In order to cut the connection, the most important step, in addition to cleaning up the lower fee chains, is to strengthen strict management on the first layer, the "first tier of defense," the operator's WAP business partners.

China Mobile announced it had suspended billings from all service providers and content providers with WAP service fee agreements, and was comprehensively clearing business names, business contents, and promotion channels. It has asked providers to give an "information security responsibility commitment" to ensure that their contents are without any pornographic material, and it is prohibiting any possibility of interest arising from pornographic websites.

 

With the popularity of mobile Internet, WAP revenues have been growing rapidly and have become the second largest source of income for China Mobile's value-added business. According to iResearch Consulting's statistics, in the third quarter this year WAP's market share was 4.39 billion yuan, accounting for 12.2% of the value-added market share, surpassing its colorful ring back tone (CRBT) and Multimedia Messaging Service(MMS), ranking the second in value-added business revenue.

 

Gao Nianshu, China Mobile's data department general manager, says that more than 500 pornographic related websites have been closed, accounting for 0.2% of the total WAP traffic, with income of about 20 million, accounting for 0.052% of China Mobile's total revenue.

 

The suspension of WAP websites charges will have a much greater impact on China Mobile's income. According to its first half financial report, WAP revenues increased by 39.0%, the fastest growth among value-added services, reaching 7.313 billion yuan, while revenues of CRBT and MMS were 7.007 billion yuan and 1.664 billion yuan, up 10.0% and 22.5%, respectively.

 

The WAP daily income has been over 10 million yuan. It is not at present clear how long the "suspension period" will last.

 

At the same time, the suspension of WAP billing also cuts sources of income for a lot of SP. Almost all SP uses WAP or service business promotion for WAP, accounting for a high proportion.

 

According to the revenue ranking of SP's WAP in September, a company located in Beijing reaped the highest income, with WAP revenue of 8.872 million yuan, while revenues of Tencent and Sina were 6.592 million yuan and 4.769 million yuan, and the industry's monthly income has been over 100 million yuan.

 

All SPs are now involved in the troubles, which may trigger market value evaporation of listed SP companies. China Mobile starts a chain reaction as it suspends SP WAP charges, which naturally stops settlements with lower partners, and these partners stop settlements with third-parties.