'One-way' charging plan falls flat

27 Jun 2007

China ranks fourth bottom of the international rankings on press freedom, as reckoned by Paris-based Reporters Sans Frontiers. That makes for a media distinguished only by its tameness (and helps explain the soaring popularity of the Web).

But telecom policy is an honorable exception. In the media and online, issues are vigorously debated and both operators and government come in for direct criticism.

China Mobile can attest to this. The 800-lb gorilla of China telecoms was on the end of a public flogging last month, with the media, bloggers and consumer advocates lining up to give it a kicking over its new call charges.

In that sense, China is no different from anywhere else. Ordinary punters love to stick it to Big Telecom, and just for once the Ministry for Information Industry (MII) was on their side.

China Mobile is a particularly inviting target - large and slow-moving, hugely profitable, only occasionally coinciding with its customers' needs. Notwithstanding its NYSE listing, it's pretty much your standard old-style PTT.

Locals grumble about the mediocre customer service and the incessant SMS spam, but it is the prices that provoke genuine anger.

Because of this the MII - China Mobile's owner and industry regulator - has been feeling the heat from economists and telecom experts over mobile tariffs. It also was the target of some high-profile rebukes during the recent National Peoples Congress.

This accumulated pressure laid out the political support for the decision by the MII and the peak economic planning body, the National Development and Reform Commission (NDRC), for the implementation of charging nationwide by 2009.

Not sustainable

China Mobile dominates cellular in China, accounting for 76% of mobile industry revenues last year (and 45% of all industry sales, fixed and mobile).

The background is that Mobile and Unicom have traditionally used mobile party pays (MPP) charging, billing for the mobile user for calls to and from cellular networks. Practice on this varies around the world, but calling party pays (or 'one-way' as Chinese call it) is pretty much standard in GSM markets.

Six years ago, when Mobile foreshadowed the possible end of two-way charging, its stock price went into meltdown, and the-then minister Wu Jichuan had to issue an assurance that MPP was here to stay.

But MPP is not sustainable over the long-term. It runs against international practice and severely limits consumers' ability to control their spending.

And, it's causing the MII some discomfort.

So, when Beijing Mobile announced its new 'one-way' calling package on May 18, it naturally expected a warm response to what was, after all, merely expected of it.

But it found itself under siege as it emerged that the new package was merely a new option available only to those who presented at a Beijing Mobile store and signed up for it. Worse, consumers not only get slugged 20 yuan to join the package, but they're paying more for both local and long-distance calls.


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