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Phone charge system to remain stable
2002-04-17
Business Weekly
The fixed-line telephone fee will remain the same after the launch of two new carriers, while long distance calls may become cheaper, industry experts forecast.
The two new operators, China Telecom and China Netcom, were created after the splitting up of the former China Telecom, the monopolized fixed-line telecoms carrier in China.
Their launch, which has been postponed several times, will create a competitive fixed-line market for the first time.
Many customers have said they hope the competition will bring them lower fees and better quality service.
Telecoms experts said the charge standard will remain stable in the near term, though readjustments will eventually be necessary.
Much regulatory work needs to be completed before the government can readjust the charge system, said Zhang Xinzhu, a government consultant who is also a researcher at the China Academy of Social Sciences.
Currently, there is no official cost calculation system for the telecoms carriers, to Zhang's dismay.
"Without a basic cost calculation system, how can the charge be adjusted?" Zhang complained.
The former China Telecom repeatedly bemoaned losing money in the local fixed-line business, but the company never released its cost figures to let people understand how it lost money.
Many customers say the fixed-line telephone charge is too expensive for them in comparison to their income level.
Experts agree but say it is for the best.
They say the charge is high because China's telecoms industry is developing years ahead of the economy, not because the carriers are trying to become rich.
"We are enjoying the telecoms services of tomorrow; that is why the telecoms charge is expensive," said Yang Peifang, a researcher at China Institute of Telecom Research.
He said the charge standard should be readjusted more fairly because the charge for local phone calls is below cost while the charge for long-distance calls is still too high.
Yang said these prices are the result of the monopolized age. When the former China Telecom was the sole fixed-line telecoms carrier, it subsidized its money-losing local phone call with profits from long distance calls.
After the government broke up the telecoms monopoly, some operators received licences to provide long distance call services.
China Netcom, China Unicom and China Railcom now all compete in the market and have driven prices down.
But the profit margin of long distance calls, especially international phone calls, is still rich with not only domestic carriers but overseas operators trying to grab more shares.
AT&T and BT, the major fixed-line carriers in the United States and Britain respectively, have all showed ambition for the long distance market. They are only waiting for a better policy environment for such business.
As competition in the long-distance call market intensifies, China Telecom will no longer be able to subsidize its local calls.
"So the fee for local fixed-line calls will definitely go up," Yang said.
But the price hike will not happen in the near term as much will have to be done first, including a public hearing and government approval.
And after the split-up, both China Telecom and China Netcom are yearning a stable period to recharge themselves.
Besides adjusting the fees, fixed-line carriers should make money by providing more appealing value-added services, experts said.
Currently, fixed-line carriers only let customers make telephone calls and access the Internet.
Many people prefer mobile phones to fixed-line phones because mobile carriers provide such varied services as SMS (short message service), games, the lottery and real-time stock price checks.
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