Chinese telecoms accused of complicity in text spam

October 30, 2013 Leave a comment

Chinese telecoms accused of complicity in text spam

Chen Chu-chun and Staff Reporter

2013-10-29

China’s three major telecom carriers have been accused of serving as accomplices to mobile spam firms in sending out a massive amount of “junk text.” The three companies have denied the accusation, raised in a broadcast by state broadcaster Central China Television. Mobile spam firms, which typically can rake in 3 million yuan (US$493,000) in monthly profits, can send out mass messages through special devices or computers.Group text messaging devices are easy to use, according to a technician. All that is needed is a SIM card and a connection to a computer which automatically distributes the message. The device can send out 6,000 text messages an hour, or 144,400 a day. The amount can be pushed higher for phones using multiple SIM cards.

The technician’s company can sell scores of such devices a month, underscoring their popularity.

The device plays only a minor role in the flood of trash text, in comparison with the aid which China Mobile, China Unicorn, and China Telecom provide, said industry insiders. Most spam firms take advantage of the systems of the three major carriers to send out mass messages by dialing 106, a service which charges 0.5 yuan (US$0.08) a message. The three carriers provide the group text messaging service in order to generate extra income and help achieve their sales targets.

This is in complete disregard of regulations set by the Ministry of Industry and Information Technology, which restricts the service to inter-company use, said a salesperson of a mobile spam firm in Chengdu.

CCTV’s investigation revealed that China Mobile not only provides convenient ways for firms to send out spam but also helps them manage official supervision. To encourage such business, telecom carriers even offer 30%-40% kickbacks to those firms.

The rate for sending out mass spam messages by dialing 106 reaches only 0.3 yuan (US$0.05) each, compared with over five cents for mass text through official advertising channels, an industry insider said. A message sent 10 million times generates 200,000 yuan (US$33,000) through ad channels, while China Mobile can pocket 300,000 yuan (US$49,000) in profit from providing related services.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment