Price War Unlikely in Current Mobile Market

A price war between China's two mobile operators is not likely in the current market situation and customers are yearning for more operators and more charging choices.

China Mobile, the country's dominant mobile operator, Friday denied rumours that charges for calls among its users would be cut by 50 per cent.

A Shanghai-based newspaper said Shanghai Mobile, the local branch of China Mobile, would adopt that policy in the next two weeks.

But China Mobile issued a quick denial, saying that any price changes involve a complicated technology process.

China surpassed the US recently to become the world's biggest mobile market, with 117 million mobile phone users.

The market is shared by China Mobile and China Unicom, with 76 per cent and 24 per cent shares respectively.

As the most profitable sector of the information industry, the two strictly regulated firms have no rights to set prices by themselves.

Any price changing, or new tariff package must be approved by the industry watchdog, the Ministry of Information Industry (MII).

The MII is now adopting an unparalleled charging standard, and the charges of China Unicom could be 10 to 20 per cent lower than the dominant carrier.

Without price setting rights, any price changes would be set by the MII, which makes a price war impossible between China Mobile and China Unicom.

"The market is asking for more choices on both carriers and charging standards,'' said Zhang Xinzhu, director of the Research Centre for Regulation and Competition at the Chinese Academy of Social Sciences (CASS).

He said the present two operators are too few to satisfy such a huge market place.

The government is also considering issuing more mobile licences to encourage better competition in the market.

But who would be the lucky one has become the most sensitive question and has attracted the most market concern.

The present charging structure is too simple, added Zhang.

Both carriers provide two charging choices, the monthly paid and pre-paid methods.

The monthly paid customers would be charged 50 yuan (US$6) as the basic monthly charge and 0.40 yuan per minute for calling or answering phones.

The pre-paid customers do not need to pay the basic monthly charge but the charge for calling or answering phones would be 0.60 yuan per minute.

China Mobile kicked off a charging tariff package earlier this year. But the package received a cold market response as it targets only high-end users.

Customers have many different habits and tendencies, their needs are very diversified and many can only be satisfied with personalized charging services, said the CASS researcher.

The operators, on the other hand, could not maximize their profits with the simple charging structure. More diversified price tiers could help the operators attract more potential customers, he said.

The MII is aware of the problem and said recently that it would help the carriers launch more price packages.

The last two years has been a golden age for the mobile operators as people rushed to buy mobile phones regardless of the service provided by operators or the price of the mobile phones.

As most of the 117 million mobile phone users are high-end customers, there is a potential market for customers who are more sensitive to user prices.

China to add 46m mobile phone users this year

China aims to add 46.4 million cell phone users this year to a total of 132 million, a Ministry of Information Industry (MII) official said.

Xu Xiaotian, chief of the MII's department of electronics and information product administration, also said in a speech at a technology fair that China planned to add 25.1 million new fixed line users to the 144 million subscribers it had at the end of 2000.

China said it had 85.26 million cell phone users at the end of last year and the MII said in June there were 164 million fixed-line users and 117 million cell phone users in China.

Cell phone use is skyrocketing in China, prompting handset and telecoms gear manufacturers like Nokia to predict the country will soon draw level with the United States, the world's biggest cell phone market.








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