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Cheaper mobile charges

(China Daily)
Updated: 2006-05-10 08:43

China Mobile, the world's top mobile carrier by subscription, will lower wireless calling charges for both incoming and outgoing calls in Beijing.

The price reduction, which may be followed by a similar cut from China Unicom, is a step towards a one-way charging system.

The price cut scheme is highly significant not merely because of the large margin of adjustment, as shown in the plan approved by the authorities.

As it happens in Beijing, which is one of the last bastions of high mobile charges, the new move may signal the ultimate thawing of the strictly regulated pricing regime of the country's mobile communication services.

From a historical perspective, the country may be justified, in the early years, to introduce relatively high prices for cellular services. It needs to pool funds for network construction, equipment purchasing and operation.

But as technology advances and construction of cellular networks wraps up, the costs of cellular operation have dropped greatly. The service providers are in no way justified to maintain the old charging standards.

As market competition intensifies, most other regions have broken through the State control of prices and continually cut prices to meet market demand. China Mobile in Beijing, on the other hand, retains a fee level from 12 years ago for GoTone, its major cellular service.

The telecoms regulators have been cautious to introduce bold pricing initiatives in recent years, despite soaring complaints from domestic users.

For one thing, they are politically responsible for maximizing the value of State assets, or, in their words, "preventing depreciation of State assets." (There is yet to be a persuasive conclusion that price cuts will lead to damage on State assets.) They also need to care for the feelings of international investors of China Mobile and China Unicom, both listed overseas.

But the interest of the 400 million domestic consumers should not be ignored, either. A balance must be found among relevant parties, even if policy-makers do not give priority to consumers at the time being.

The current price cut initiative obviously is a transitional move toward the ultimate one-way charging regime. It reflects the regulators' will to keep a balance among different interests and adopt a gradualist philosophy in reforming the pricing regime.

But as the cellular operators are enjoying handsome profits, there remains ample room for further price cuts.

Last year, China Mobile registered a net profit of 53.55 billion yuan (US$6.69 billion), much more than many other international telecom carriers.