“According to telecom regulations, mobile phone carriers should follow standard charges set by the Ministry of Information Industry.”

The standard states that China Mobile may charge a basic monthly fee of 50 yuan, or 6 U.S. dollars, and 40 fen, or 5 U.S. cents, per minute of talk time. China Unicom, as the minor carrier, is officially entitled to charge 10 percent less.

But the fact is that very few local branches of the two carriers are playing by the rules. A few major cities, including Beijing, Shanghai and Guangzhou, are the only exceptions to the price war battlefield.

Outside these few cities, price wars between the two giants continue to rage nationwide. In their fight to attract more customers and gain a bigger market share, both China Mobile and China Unicom have launched an artillery of promotion plans for lower charge packages.

The carriers have already introduced a “family network” program to many cities, in which members of the same family pay one fourth of the normal price for calls to each other.

Price cuts of this kind are rife in many cities and signifcantly slash profits of both carriers. But some other experts say this situation is the result of complicated factors which indicate the deep-rooted flaws in the management of the telecom services.

They say the rapid growth in mobile phone users has led to a drop in the average cost per user. So the previous price standards should be adjusted to the current situation.

Meanwhile, Professor Lin believes as China’s telecom industry matures, mobile carriers should shift their focus from superficial price cuts to long-term customer service.

(China Radio International September 6, 2002)