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Chinese regulators are launching a slew of initiatives to relax their grip on the mobile phone charging system, which should benefit the country's 480 million mobile subscribers.

The Ministry of Information Industry (MII) and the National Development and Reform Commission (NDRC) on April 27 announced they would push operators to adopt the caller-pay charging scheme within two years.

The MII last week began a poll on its website, soliciting public opinion with the aim of lowering caps on roaming fees before December.

That marks a major departure from regulators' long-standing tight grip on telecoms fees. China allows cellular operators to charge both callers and receivers, a focus of complaints among consumers. Usually a mobile phone call costs 0.4 yuan per minute.

Regulators have been reluctant to switch to a one-way charging scheme, fearing that it would cause huge losses for China Mobile and China Unicom, both of which are now listed overseas.

In recent years, the MII has been muted on the possibility as well as the timetable for introducing the caller-pay scheme.

"Heated discussions on one-way charging as well as MII's bold initiatives are indications that the so-called loss of State-owned assets are no longer a hindrance to the introduction of caller-pay scheme," said Lu Qijun, a researcher with the State-owned Assets Supervision and Administration Commission (SASAC).

In 2000, a rumor of the implementation of a one-way charging scheme sparked a heavy sell-off of shares of China Mobile and China Unicom in Hong Kong. A loss of nearly HK$200 billion of capitalization forced former MII chief Wu Jichuan to make a promise not to launch the caller-pay scheme within two years.

But now "investors are becoming rational as they understand the caller-pay scheme will cause much in the way of losses to operators, especially China Mobile, which is signing up an increasing number of subscribers in rural areas," said Wang Guoping, an analyst with China Galaxy Securities.

In many less-affluent regions, a de facto caller-pay scheme has been practiced for some time. Despite that, China Mobile recorded an annual turnover of 295 billion last year, up 21.5 percent from 2005.

Now about half of China Mobile's new subscribers come from rural areas, which offset the impact of one-way charging.

"Even if the pure caller-pay scheme is introduced, China Mobile can maintain its good performance by improving its management and cutting costs," Wang said.

China Mobile controlled about 70 percent of newly generated revenues and profits in China's telecoms service sector last year. A report released on Monday by the SASAC showed the average salary at State-owned telecom operators is two or three times other sectors.

Lu said even if roaming fees are scrapped, China Mobile could afford the possible loss. In China, when a mobile phone user travels to another city, he or she has to pay for the roaming fees, which usually cost 0.60 yuan per minute.

With European Union pushing for the elimination of roaming fees between European countries, pressure has been piled up on Chinese operators.

"It's unreasonable to charge roaming fees in China," said Lu. But Lu said consumers might not save much from the drop of mobile phone fees unless the industry is re-aligned.

(China Daily 05/17/2007 page14)

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