Latest technology gets people talking

The operators have now realized that the rate they set for WeChat to rent the telecom network was too low. Initially, they had not expected the service to take up a large amount of signaling resources, according to Xiang.

"Users will pay the charges eventually," he said. "Although Tencent dares not charge WeChat users for fear of losing customers, it will find other ways to generate revenue - for example, by offering value-added services."

Some information technology and telecommunications industries experts and professionals are worried that the case will set a precedent for other over-the-top, or OTT, services and hamper innovation.

"Will telecom operators charge commission whenever a successful product appears on the market?" asked Kai-fu Lee, former head of Google China, on Sina Weibo.

It is widely believed - especially among users - that Tencent has taken a significant amount of traditional voice and text-messaging business away from the telecom operators, which has caused them to retaliate.

"As a result of technical innovations, OTT services provide telecom operators with an opportunity for data traffic growth, but they have also become a substitute as well as a challenge to text and multimedia messaging services and even voice services," according to a China Mobile spokesperson in an e-mail to China Daily.

According to the China Mobile's annual report, its wireless data traffic hit 1.04 trillion megabytes in 2012, an increase of 187.6 percent from 2011. Revenue from the wireless data traffic business increased by 53.6 percent to 68 billion yuan ($11 billion).

By contrast, revenue from voice services, which accounted for 66 percent of China Mobile's total operating revenue, increased by just 1.1 percent. Revenue from short message and multimedia messaging services fell by 4.8 percent.

"Monopoly is the essence of the fight between the telecom operators and Tencent," said Du Zide, secretary-general of the China Computer Federation. "If we have full market competition in the telecommunications sector, each company will make great efforts to improve its own service capacity, rather than trying to increase its revenues by adding a new charge."

Operators criticized

In a statement issued on April 6, the federation criticized telecom operators for charging high fees for data transmission through a virtual monopoly. China Mobile, for example, charges 0.1 yuan for a text message of up to 70 Chinese characters, 0.3 yuan for a domestic multimedia message and 1.5 yuan for an international multimedia message of up to 300 kilobytes.

"For many years, these 'monopolies' have made extremely high profits. By using their dominant position, they have attempted to obstruct and force out new technologies and applications through administrative means, instead of producing technological innovations and improving their own competitiveness," said the statement.

The federation also slammed the telecom operators for charging twice for the same service, given that mobile users have already paid for the use of the telecom facilities.

"Charging Tencent for its signaling traffic would be like charging for the names, addresses and post codes on envelopes. That's ridiculous," said Du.

China Mobile did not mention in its e-mail whether it, or the other major telecom operators, will charge Tencent for hosting WeChat. Instead, the company blamed OTT services for occupying the signaling channel continually, causing congestion in the network, something that not only affects the quality of basic telecommunication services, but also endangers network safety; OTT applications have increased the volume of signaling traffic and led to telecom operators overseas suffering network outages.

In the telecom industry, signaling refers to the practice of sending a signal from the transmitting end of a telecom circuit to inform a user at the receiving end that a message is to be sent. Like a switch, it controls the beginning and end of the information exchange.

"In the past, the establishment of telecommunication behavior (such as constantly polling the network to establish new connections) was not so frequent, so we assigned a relatively narrow channel to signaling," said a China Mobile employee who preferred not to be named. "But messages are constantly sent to the servers to let them know that users are still online. As a result, our signaling channel is congested. It has affected regular mobile telecommunications services, such as voice services."

"On the one hand, we will put more resources and investment into expanding our network capacity. On the other hand, we are calling for the establishment of a mechanism to administer third-party applications and prevent them from occupying public resources unscientifically and uneconomically," he said.