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China Caps Its Phone Call Charge,Giving More Freedom to Telecom Companies

Posted on: Saturday, 3 September 2005, 12:00 CDT

China caps its phone call charge,giving more freedom to telecom companies

BEIJING, Sept. 2 (Xinhua) -- China announced a reform on official phone call fees here Friday, giving telecom companies more freedom while capping the charge.

Starting from Oct. 1, domestic and international long distance calls, and calls from the mainland to Taiwan, Hong Kong and Macao, will be kept below a certain level, said a document jointly released by the Ministry of Information Industry (MII) and the State Development and Reform Commission.

The charges on mobile communication in the areas out of the registration localities and fixed-line phone calls within the same network will also be set a highest limit, said the document.

Within this limit, telecom operators are free to set their own price, according to the document.

The policy has delivered the power of price setting from the government to telecom operators, which means a big step in China's telecom reform, said sources with the MII.

China previously had a price mechanism strictly controlled by the government in the telecom industry and the companies were required to strictly follow the price set by the government.

Actually, as China has six major telecom companies, there has been a price war among them in order to win more market share. The price is quite low in regions where competition is very heated, but quite high in places where the market is not open enough.

Following the new document, the government regulator would adjust the charge standard in accordance with changes in the market and telecom companies can also make such applications.

The MII requires the telecom companies to guarantee the legal rights of subscribers and not to whimsically raise prices.

Officials with the MII announced earlier this year the return of the right of price setting to the market in a bid to develop the telecom industry in a more market-oriented way.

As part of the reform on the telecom industry, China is making a draft plan to regroup its six telecom operators, which are believed to be announced later this year.

Source: Xinhua News Agency - CEIS

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