China caps landline call prices

15:34, November 25, 2009      

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The charges on landline calls and Personal Hand phone System (PHS) services will be adjusted, according to an announcement jointly released by China's Ministry of Industry and Information Technology (MIIT) and National Development and Reform Commission (NDRC) Tuesday.

The person responsible for this adjustment said the change does not involve specific adjustments on prices, but a change in the management system of the charges.

According to the new system, the government will set a cap on maximum basic monthly charges and local calling rates for landline local telephone services as well as PHS services, and give the telecommunications operators more freedom to cut fees themselves.

Previously, those fees were all mandated by the government and even the “payment packages” the telecom operators offered to customers needed to be approved by the government.

Under the new system, telecommunications enterprises should provide at least one pricing plan where the fee structure is equivalent to the current tariffs to consumers, which was set in 2001. The MIIT and NDRC also say the charges should not exceed those set in 2001.

At the same time, the telecommunications operators also can decide the pricing plans, their own fee structures, accounting units, and fee standards according to the market situation and customers' needs.

This move can help to boost the telecommunications operators' competitiveness against mobile-phone services since the trend for mobile phones to replace landline services is becoming even more popular.

China Telecom Corp. and China Unicom (Hong Kong) Ltd. lost 18.8 million landline customers this year as consumers turned to wireless services due to falling handset prices and lower mobile calling charges.

According to data from the central government, in October, there were 9.7 million new mobile phone customers, while those for landlines dropped by 2.37 million. The data from MIIT showed that by the end of October, there were 729 million mobile subscribers and 321 million landline users in China.

The new policy "will enhance the operating flexibility of the company," according to a China Telecom's e-mailed statement to Bloomberg.

This moves also aims to reduce telecommunications costs for consumers, the NDRC said in the announcement.

Source: Global Times
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