The government's decision to eliminate installation and initiation charges for telephones has received a warm welcome among customers with telecom operators expecting the number of users to jump the rest of this year.
China used to collect a one-off installation fee for fixed-line telephones and initiation charges for mobile phone.
The charges stopped on Sunday and the Ministry of Finance said the move could save about 20 billion yuan (US$2.4 billion) a year for customers.
On Sunday, the day the charges ended, many people rushed to buy mobile phones or register to install fixed-line phones.
According to statistics from Beijing Mobile, the local branch of China Mobile, the number of new subscribers on the day was 300 per cent higher than normal.
The elimination of the fees will encourage more people to buy a mobile phone, said Fang Jianguo, spokesman of Beijing Mobile.
Mobile phone initiation charges were as high as 5,000 yuan (US$604) in the mid 1990s but that was significantly reduced to 500 yuan (US$60) this year.
Customers can now become a Beijing Mobile subscriber by paying just 80 yuan (US$9.7) for the SIM card.
"Without the initiation fee, it will be much easier for customers to change service providers," said Kan Kaili, dean of the business school with Beijing University of Post and Telecommunications.
If one mobile operator provides a better service, many customers will leave their original firm and transfer to the better service provider, he said.
The number of people applying for fixed-line telephones has also significantly increased. More people than normal registered on Sunday in Shanghai Telecom, the local branch of China Telecom, to have phones installed in their homes. The increase in suburban areas of fixed-line phones is expected to surpass that of cities as the penetration rate is already quite high in cities like Beijing, according to officials with China Telecom.
There are 5 million fixed-line phones in Beijing which has a population of 13 million.
However, as the countryside has a much lower telephone penetration rate, the number of subscribers there will see a rapid growth in the rest of the year encouraged by the elimination of installation fees, said China Telecom.
By the end of May China had 160 million fixed-line telephones and 111 million mobile phones, according to the Ministry of Information Industry.
(China Daily 07/03/2001)
