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Guangzhou Unicom, a subsidiary of China Unicom, is introducing a one-way service charge to its mobile subscribers today to consolidate its market share in Guangzhou, one of the country's most lucrative telecom markets.
According to the company, by simply paying 10 yuan (US$1.2) each month, its GSM (global system for mobile communications) users can enjoy free incoming calls made from any mobile phone, including calls made from the subscribers of its competitor China Mobile.
"It is a part of our strategy to secure a firm foothold in the fiercely competitive market," said Ku Wei, spokesman for Guangzhou Unicom.
In a telephone interview with China Daily yesterday, he denied that the service has been implemented to fight against the "Little Smart" service launched by China Telecom in the same area.
The "Little Smart," also called 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 does not allow roaming between cities.
The communication fees for Little Smart are set between 0.1 yuan to 0.2 yuan per minute, compared to 0.40 yuan per minute for GSM phones.
But the spokesman believed the new service would be effective in retaining its low-ended GSM subscribers.
"The service sounds great and can save me a lot of money," said 26- year-old Li Jianhong, a Guangzhou resident polled by China Daily.
The company launched a similar service for its CDMA users in March. By paying 18 yuan (US$2.1), its CDMA users were able to receive free local incoming calls from both mobile phones and fixed-line phones.
"Guangzhou Unicom's new move is merely the company's regional promotion activity," said an official from China Unicom in Beijing, who refused to be named.
According to her, China Unicom have no immediate plans to launch a one-way service charge nationwide.
However, analysts believe that Guangzhou Unicom's move is going to heat up the already hot telecom market.
China Unicom already spent much of 2002 engaged in a battle with rival China Mobile for subscribers, relying heavily on subsidies and other promotions to boost its new CDMA (code division multiple access) service.
A company source said that its focus for 2003 will be profitability of its CDMA network.
Wang Jianzhou, president of China Unicom, announced late in March the kick-off of its 2.5 generation of mobile telecommunications - CDMA 1X in the country's major cities.
CDMA 1X provides better service to mobile phone subscribers in terms of more value-added services, such as video and photo mails and wireless Internet access.
Analysts believe the CDMA 1X will have a positive impact on the growth of wireless data usage and will contribute to beefing up China Unicom's ARPU.
But investors remain concerned about ambitious growth targets for the CDMA network, fearful they will force the company into another round of costly promotions.
Besides, both China's two biggest fixed-line carriers, China Telecom and China Netcom have built "Little Smart" networks this year to provide wireless phone services to increase their revenue.
With its comparatively low telecommunication fees, Little Smart is likely to reshape the market share of mobile telecommunications, according to analysts.
"The telecommunications fee for second-generation mobile telecommunications (including GSM and CDMA) is no longer adaptive to the market," said Chen Jinqiao, director of Telecommunications Policy Institute under the Ministry of Information Industry.
(China Daily April 8, 2003)
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