China Mobile earmarks 10b yuan in 3G subsidies
China Mobile, the country's biggest mobile operator, will provide 10 billion yuan (HK$11.35 billion) worth of subsidies for mobile telephones based on the homegrown TD-SCDMA 3G technology as a way to boost distributors' incentive to sell the new handsets.
The company will also bundle the digital mobile television service based on the homegrown CMMB technology into TD-SCDMA mobile phones to attract users.
China Mobile vice-president Lu Xiangdong this week said the company would classify all TD-SCDMA mobile telephones into three categories and the amount of subsidies would depend on the classification.
Class I phones, which are customised for China Mobile, may have higher subsidies or alternatively, China Mobile may reach an exclusive deal with the makers over price.
China Mobile may subsidise the cost of making the phones or apply the subsidy on voice usage fees to boost sales. For lower-class handsets, the operator may urge its local subsidiaries to introduce strong promotional campaigns.
China Mobile previously only subsidised handsets to retain high-spending subscribers. It said the handset subsidies previously amounted to about 8 billion yuan each year.
China Unicom has also adopted an aggressive handset subsidy programme for its CDMA service, which debuted in 2003. The company spent more than 6 billion yuan on CDMA service subsidies during the first two years of its operation. The CDMA network is now operated by China Telecom following the industrywide restructuring.
China Mobile also intends to provide lower voice usage fees for the 3G service. The company said users making phone calls on the 3G network would enjoy a certain discount over the existing 2G service.
To push the digital mobile television service, mobile-phone makers can build CMMB antennae into the TD-SCDMA 3G handsets.
The CMMB service is operated by a company controlled by the State Administration for Radio, Film and Television. It covers 120 cities and targets 175 cities by the end of June.
The technology enables users to watch television programmes on the go through mobile phones or portable multimedia players with built-in antennae.
Retention cost
Amount China Mobile previously spent on handset subsidies each year, in yuan: 8b yuan
