Last Thursday, Shanghai Mobile, which supports about 60 percent of local mobile phone users, kicked off its "Call more for less" plan.

After paying a 10 yuan (US$1.2) monthly fee, its GoTone and M-Zone subscribers will be charged for 0.3 yuan for the second minute of a call. The price is 0.2 yuan per minute afterwards, compared with the normal rate of 0.4 yuan per minute.

"The response has been ex-plosive. Within one day our hot line has received more than 10,000 inquiries," said Zhang Chunmin, a spokeswoman for Shanghai Mobile.

"As of Friday night, more than 10,000 people had signed up."

Earlier this month, Shanghai Mobile began offering users free incoming calls.

Shanghai Unicom, the rival of Shanghai Mobile, has cut its rates in a similar fashion.

The company's "More free calls" package offers contracted users 800 minutes of incoming calls for 26 yuan per month. As of last Thursday, more than 16,000 users had subscribed to the package.

The company says it won't follow Shanghai Mobile's move in lowering fees after the first minute of a call.

"Their (latest) offer sounds wonderful. But actually, our survey found most mobile calls last one to two minutes, so users don't really benefit from that," said Deng Yulan, an official with Shanghai Unicom. "We are still waiting to see how things will unfold."

The price cuts were spurred by the emergence of the city's third mobile carrier, Shanghai Telecom, the city's dominant fixed-line operator.

Its "Little Smart" wireless service started in mid-May in rural Songjiang and Fengxian districts.

The much-cheaper service is based on the fixed telecom network and charges users according to fixed-line rates.

The charges are 0.22 yuan for the first minute and 0.11 yuan following with no charge for incoming calls.

It will be available in parts of downtown Shanghai by July and cover most of the city by October, according to the company.

While price cuts might help China Mobile and China Unicom maintain user growth, it will also hurt their earnings, said Deng Zhicheng, vice president of CCID Consulting, a Beijing-based IT consulting firm.

"Currently, price is the most effective marketing tool in China. Users don't care much about technology differences," he said. "Mobile phone operators in the city are trying to push users to talk longer, but they cannot offset the losses caused by lower rates."

(Shanghai Daily May 26, 2003)