National Roaming Fee to Cut in China

(Business News & Technology News, 29 Jan 2008)

Two relevant telecom regulators, National Development and Reform Commission (NDRC) and Ministry of Information Industry (MII), recently held a public consultation on reduction of national roaming fee. The new price cap for roaming possibly will come out before Chinese New Year. It is one further step of Chinese tariff reforms, following gradual cancellation on receiving party pay mechanism, regulating mobile price packages. In comparison with current roaming charges, roaming fees will fall by 13.3 percent and 80 percent under the two draft plans, according to the official statistics. “We see over 500 million customers will benefit from the tariff reduction, in particular current inflation rate hits decade-high and thousands of end users will travel between provinces over Chinese New Year holiday,” says Charice Wang, Research Analyst at Ovum, based in London. Nevertheless, as the only country to charge end-users travelling inter-provinces for using mobile in one network, the most debate is unexposed cost of roaming at one network between provinces. As most information of operators has not been disclosed to public, customers hope a further cut than the second plan and operators prefer the first proposal with less cut. The new tariff shall strengthen fixed-to-mobile substitution (FMS) in China. In December 2007, China Netcom and China Telecom, two major fixed-line operators, reported their landline subscribers continue to fall by 2.53 million and 1.48 million respectively. Whereas, there is a rapidly increasing popularity of mobile services and China Mobile announced to gain 6.6 million new customers in the same period. The lost balance between mobile and fixed operators will be enlarged when end users prefer to use mobile as a result of lower roaming charge. Therefore, the lower roaming fee might lead to the telecom sector restructuring, when the governments consider the state-own fixed operators’ revenue and long-term development speed up. “The year of 2008 is not a quiet year for China telecom sector,” says Wang.