The Ministry of Information Industry is unlikely to approve the dual-mode PAS/GSM or PAS/CDMA handset for the Chinese market right at the moment, a source close to the ministry said yesterday.

"Though such a type dual-mode phone was submitted for inspection late last year, the restriction is unlikely to be lifted now," said the source who declined to be named.

The dual-mode PAS (personal access system)/GSM or PAS/CDMA, also called dual-mode xiaolingtong, enables xiaolingtong subscribers who travel outside of their service area to make and receive phone calls on surrounding GSM (global system for mobile telecommunications) or CDMA (code division multiple access) networks.

Moreover, in their service area, users can also choose to make or receive calls on either PAS or GSM or CDMA.

Xiaolingtong is built onto the existing fixed-line network and lures users with low per minute rates, one-way charges and cheap monthly fees.

It has been reported that subscribers in some of the country's regions including Guangdong, Fujian provinces and Beijing are able to purchase this kind of dual-mode xiaolingtong manufactured by UTStarcom Ltd, a global leader in IP access networking and services.

However, UTStarcom (China) Ltd denied the sale of such handsets on the Chinese market.

"We strictly observe the related rules and regulations. Before the ban for selling dual-mode phones is lifted by regulators, we are not selling the dual-mode phone in Chinese market," Richard Feng, senior manager of Media & Investor Relations of UTStarcom (China) Ltd told China Daily yesterday.

He said there are some dual-mode phones in several of the country's provinces and cities. "But they are used for testing and are not sold commercially."

UTStarcom Inc initially launched its first dual-mode PAS/GSM handset in Viet Nam on February 27 - the UT818 to serve local subscribers in Hanoi and Ho Chi Minh City.

"The UT818 handset is the result of tremendous demand by subscribers for the convenience of a dual-mode handset, which allows for interoperability between PAS and GSM networks," said Hong Lu, chairman and chief executive officer of UTStarcom.

According to Feng, the sales of the dual-mode phone are very promising though exact figures were not immediately available.

The company plans to introduce the handset in other markets later.

Equipment makers such as UTStarcom, ZTE Corporation and Lucent Technologies Qingdao are benefiting from the fast development of xiaolingtong in the Chinese market.

Last year, UTStarcom shipped 16.5 million handsets, establishing it as the largest supplier of handsets in the Chinese market and greater than 60 percent of xiaolingtong handset market share.

Xiaolingtong is booming because both China Telecom and China Netcom are enhancing their investment on the service, rivals to grab the market as both carriers lack mobile phone licenses.

"Though it is a transitional technology, there is still market potential for the development of xiaolingtong as it meet the demands of low-end customers," said Si Furong, managing director of China Telecom Corp Ltd.

But he denied that China Telecom is planning to roll out dual-mode xiaolingtong business.]

"Xiaolingtong will continue to be a key revenue driver for both China Telecom and China Netcom," said Dai Chunrong, an analyst with China Securities.

But she believed that the growth momentum is likely to slowdown if the Chinese Government issues 3G licenses later this year.

Both China Telecom and China Unicom are to secure a mobile license when the Chinese Government starts to issue third generation mobile communications licenses.

Government figures indicated that xiaolingtong services are currently available in more than 400 cities nationwide with the subscribers reaching more than 50 million so far.

(China Daily August 13, 2004)