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China Mobile halves tariffs in Chongqing

May Chan

China Mobile, the country's dominant mobile carrier, has cut tariffs in Chongqing, Sichuan province, by as much as 50 per cent to compete with fixed-line giant China Telecommunications' city-wide wireless services.

The operator has launched a new discounted service, Doushitong, which charges mobile users between 20 fen and 30 fen per minute for local calls.

The new service uses China Mobile's GSM (global system for mobile communications) network but offers limited features. It undercuts China's official mobile tariff of 40 fen per minute by between 25 per cent and 50 per cent.

China Mobile's aggressive promotion came just two weeks after China Telecom began offering its city-wide wireless services - called Xiaolingtong - in Chongqing. Users are charged 20 fen for the first three minutes and 10 fen per minute after that.

'It's part of our marketing strategy,' Bloomberg quoted Chen Yan, the deputy director of China Mobile's planning department in Chongqing, as saying.

'The business environment is ever-changing. We need to react.'

She would not comment on whether the service was a response to Xiaolingtong.

China Mobile's new Chongqing service is its second attempt in two weeks to combat efforts by fixed-line carriers to tap mobile revenue by offering Xiaolingtong services. Earlier this month, China Mobile began offering a service called Baixingtong in Hebei province's capital Shihjiazhuang. It charges users as little as 11 fen per minute for calls to other China Mobile users within the city.

The discounted service was triggered by China Netcom's launch of wireless local loop services in the city.

China Telecom and China Netcom have aggressively deployed wireless local loop services in top-tier cities such as Chongqing and Guangzhou.

In the past three weeks, the two fixed-line operators have granted nearly US$500 million worth of contracts to Nasdaq-listed wireless local loop equipment supplier UTSTarcom to deploy Xiaolingtong networks in major cities.

China Mobile has said Xiaolingtong does not pose a threat as the service mainly caters for the low-end market.

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