China Mobile

Bias claimed in phone-bills plan

PUBLISHED : Monday, 04 December, 2000, 12:00am
UPDATED : Monday, 04 December, 2000, 12:00am

China's top telecommunications regulator has been accused of putting the interests of two businesses above those of tens of millions of consumers in its handling of the controversial one-way mobile billing proposal.

Last Friday, the Minister of Information Industry Wu Jichuan, in an apparent bid to soothe the fears of investors, said the hotly-debated mobile phone billing system would not be implemented this year or next year.

The pledge received cheers from Hong Kong fund managers and investors, who sent share prices in China's two listed telecom firms soaring on the day.

However, the announcement has attracted stinging criticism from mainland economists and consumers.

'Mr Wu has made an over-commitment which he will find it hard to keep. He has no right to do that, at the expense of tens of millions of Chinese consumers,' said Zhou Qiren, a leading mainland economist.

Mr Zhou, a professor at the China Centre for Economic Research of the prestigious Peking University, said the minister's pledge came after panic selling by investors wiped nearly HK$200 billion off the combined market capitalisation of both China Mobile (Hong Kong) and China Unicom - China's two SAR-listed telecom operators.

'This means the Chinese consumers will have to pay dearly for mobile phone services for a much longer time,' he said.

China is the world's fastest growing telecoms market, with the number of mobile phone users expected to reach 70 million by the end of this year, compared with fewer than 30 million last year.

Mr Wu has forecast China's telecom sector to grow by as much as 28 per cent this year.

Other Chinese analysts also voiced their dismay at the announcement, expecting stronger opposition and protest from mainland consumers as news of the delay in implementing a caller-pays mobile billing system filtered through the next few days.

The Ministry of Information Industry (MII) has been under mounting pressure to adopt the system to promote the development of China's mobile phone market.

Both mobile phone callers and receivers are paid for their calls.

Premier Zhu Rongji has publicly stated that he believes the mainland should rationalise its overall telecom cost structure and lower charges in the future.

Early last week, the official mainland media and local newspapers quoted middle-ranking MII officials as saying the State Council approved the caller-pays only system, with some suggesting it would be implemented at the start of next year.

This has raised serious concerns among foreign investors about the transparency of Beijing's decision-making process, causing share prices of China Mobile and China Unicom to fall between 20 per cent and 30 per cent last week.

Chinese analysts said the controversy reflected an issue much broader than transparency, adding that there were lessons to be learned by both the government and international investors.

'MII is faced with a huge dilemma - on the one hand, it stresses the monopolistic nature of China Mobile and China Unicom during their share sales to foreign investors, and on the other hand, it is now increasing pressure to introduce competition and lower prices from Chinese consumers. Their selling point should have been on competition instead of monopoly,' Mr Zhou said.

He said the government had not thought the process through before privatising monopoly industries such as telecoms and oil.

'When Britain and Hong Kong announced they would open up their telecoms sector, they released a detailed timetable along with measures including compensation to the monopoly operators,' Mr Zhou said.

'What [the Chinese government] has done is still like the old way of touching the stones to cross the river - without a clear site-map.'

Mr Zhou said the government first should have fostered competition and then encouraged public listings. He said foreign investors had more confidence in competition.

'Investors should also have known better. They should not have bought into the officials' line about monopolies and the government's support. Just remember what happened to Beijing Enterprises, Shanghai Industrial [Holdings], and Gitic Enterprises,' he said.