Fee cut to hurt income of mobile operators

PUBLISHED : Wednesday, 21 March, 2007, 12:00am
UPDATED : Wednesday, 21 March, 2007, 12:00am

China Mobile and China Unicom to lose 1b yuan in annual revenues as regulator aims to slash domestic roaming charges

China Mobile and China Unicom, the nation's two mobile-phone operators, stand to lose a billion yuan in annual revenues as the Ministry of Information Industry, the telecommunications regulator, seeks to cut domestic roaming fees this year.

The ministry said in an online statement it aimed to bring down such fees this year amid rising complaints from mobile-phone users over high roaming charges.

'Some delegates at the National Peoples Congress meeting urged mobile operators to reduce the domestic roaming fee,' a source familiar with the situation said yesterday. 'Mobile operators may earn at least a billion yuan of revenue each year [from such fee].'

Mainland mobile-phone users are charged a roaming fee whenever they make or receive calls outside of the region in which their accounts are registered.

Beijing Mobile, a subsidiary of China Mobile, said on its website that the domestic roaming charge for post-paid users is 60 fen per minute, 50 per cent more expensive than the domestic call tariff of 40 fen per minute.

According to China Mobile's 2005 annual earnings report, usage fees, including local, domestic and international roaming charges, accounted for 64.5 per cent of total revenue of 243 billion yuan.

'The domestic roaming charge is criticised as a profit centre for mobile operators as cross-province roaming involves only a few additional costs,' the source said.

Industry watchers said domestic roaming fees should be cancelled because other overseas markets did not have additional charges for calls within the country.

The European Commission is even studying a plan to reduce roaming charges for inter-country calls within the European Union.

Hutchison Whampoa said early this year that all users of its third-generation networks in Europe and Hong Kong would not be charged for international roaming.

Zhu Jun, a vice-director of the ministry's department of financial adjustment and clearings, said the ministry would assess the existing upper limit of domestic roaming charges, which would lead to a reduction, Xinhua reported yesterday.

Mr Zhu said that overall telecommunications tariff dropped by 11.4 per cent in 2006 from a year earlier.

However, users were still far from happy with the tariff levels mainly because of the 'extraordinarily high' roaming fees.

Domestic roaming fee adjustment is part of the ministry's telecommunications market reform this year.

Other areas under its 2007 plan include the 'calling party pays' system and simplification of the tariff packages.