China Mobile

Lower roaming fees seen boosting China Mobile's dominance

PUBLISHED : Wednesday, 23 January, 2008, 12:00am
UPDATED : Wednesday, 23 January, 2008, 12:00am

China Mobile will further cement its dominant position in the country after a reduction of domestic roaming charges to make long-distant calls more affordable for mobile users, according to China Netcom Group Corp.

According to mainland website NetEase, yesterday at a public hearing on the charges in Beijing, China Netcom's representative said it was not appropriate to slash roaming fees.

'If the roaming fees are cut too much, this will further solidify the dominant position of China Mobile,' China Netcom's representative said.

Such concern from China Netcom, the mainland's second-largest fixed line operator, was also echoed by the National Development Regulatory Commission, the government's top economic planner.

'The reduction of domestic roaming fees will lead to further unbalance the competitive landscape in the mainland telecoms market, diverting existing fixed line usage to mobile phones,' the NDRC said. 'China Unicom and other fixed line operators will face a tougher market. The new roaming fees should be gradually phased in.'

China Mobile was reported to have said it supported lowering the roaming fees, while China Unicom supported a gradual reduction of the roaming fees.

The NDRC and the Ministry of Information Industry organised the closed-door hearing in Beijing in which 18 representatives from the operators, government departments, consumers and professionals were invited.

'The representatives reached a consensus yesterday to cut domestic mobile roaming charges and simplify the mobile tariff mechanism,' the NDRC said, adding that the government would study all the opinions from the hearing and would introduce a final domestic roaming tariff shortly.

Mobile roaming fees are charged when users make or receive calls outside the provinces or cities where the services are registered. The basic domestic roaming charge is 20 fen per minute on top of the local voice tariff, while a document submitted in the hearing suggested the cost for operators is six fen.

Domestic roaming fees accounted for 12 per cent and 8 per cent of total revenue for China Mobile and China Unicom respectively, according to a Cazenove estimation.

The commission has submitted two proposals on the reduction of domestic roaming fees. One of the proposals suggested cancelling the 20 fen per minute additional charge, and setting an upper limit on basic fees for making and receiving domestic roaming charges at 70 fen per minute and 30 fen per minute respectively without charging users long distant call fees. This proposal represented a 63 per cent fall in domestic roaming fees, and was widely supported by representatives.

'The representatives are asking for a further reduction of tariffs,' the NDRC said.

Cheaper calls

One proposal from the NDRC would mean fees could fall by 63%