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Telecom Operators Compete for Subscribers
A battle among telecom operators was started in China this week after the government cancelled some charges for telecom subscribers.
The installation fee for fixed-line phones and network connection fees for mobile phones were eliminated by the government on Sunday.
The move got a warm welcome among customers but minor telecom operators complained as their price advantage was severely hurt.
According to government policy, minor telecom operators China Unicom and China Railcom were able to charge customers 10 to 20 per cent less than the dominant China Mobile and China Telecom.
Before Sunday's charge elimination, China Unicom was charging 450 yuan (US$54) for network connection, 10 per cent less than China Mobile. China Railcom, the new fixed-line operator which was scheduled to start nationwide operation later this month, planned to charge 680 yuan (US$82) for telephone installation, which is only half of China Telecom's charge.
Eliminating the one-off installation and connection charges has damaged the competitive edge of these two minor players.
Beijing Unicom, the local branch of China Unicom, launched a new preferential package Thursday to give a 10 per cent discount on the original 50 yuan (US$6) basic monthly charge and on local calls, which originally cost 0.4 yuan (5 US cents) per minute.
Beijing Unicom tried to reverse the unfavourable situation in its competition with Beijing Mobile.
"The network connection fee is a one-off charge, and our package will provide long-term favourable prices for customers,'' said He Wei, spokesman of Beijing Unicom.
The company previously adopted preferential prices for pre-paid mobile phone users. The call was originally charged 0.6 yuan (7 US cents) per minute.
Beijing Unicom did not say when the preferential prices would stop.
The spokesman said the company expected to attract more customers via the long-term preferential package.
Beijing Unicom has about 1 million users at present, according to the company.
Its rival, Beijing Mobile, has enjoyed rapid user growth in the first five days of July.
"Customer numbers have shot up by 150 per cent,'' said Fang Jianguo, spokesman for Beijing Mobile.
The company, which has more than 3.5 million registered users, has no plan to launch a price war with its rival, said the spokesman.
China Unicom and China Mobile are both overseas listed companies. They announced on Tuesday that the connection charge elimination would not severely hurt business.
The business of China Railcom, the new fixed-line operator, has been damaged by the elimination of installation charge.
Its major competitive advantage was lower price and better services. Since its service has not started in most of the country, price advantage is the only visible advantage for most of the customers.
The company was scheduled to provide services in mid-July, and some attractive promotion plans are needed for China Railcom to grab customers' interests.
China Telecom, the dominant fixed-line operator, is also under fire although the installation fee elimination should bring it rapid new customer growth.
The huge telecom giant is presently facing government consideration for it to split up.
But telecoms companies have warned that in the light of the country's impending entry to the World Trade Organization, a split in China Telecom could weaken the group power of China's telecom industry.
Source: China Daily
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