One country, one fee

China’s telecoms operators are ditching their intercity roaming charges

A woman speaks on her iPhone as she walks on a busy street in downtown Shanghai

Now free to roam as she pleases

Last October, the European Parliament voted through new rules that will scrap mobile roaming charges within the EU.

“After 10 years of tireless fighting, roaming is over. A victory for consumers and a stepping stone towards a truly European digital single market,” celebrated Viviane Reding, the former EU commissioner responsible for telecoms and media regulation.

Consumers in China, however, weren’t quite so enthusiastic when their country’s three mobile carriers announced this month that they will also abolish domestic roaming charges – in most cases, by the end of this year (China Mobile will phase them out more gradually).

Currently, customers are charged additional fees if they use their phones outside their local markets. For instance, China Mobile users are charged up to Rmb0.8 per minute (about 12 American cents) for the roaming service, which nearly doubles costs for subscribers. If a Beijing resident travels to Shanghai, he or she will have to pay these roaming charges for making and accepting voice calls.

Not for much longer: in August, China Telecom announced plans to cancel domestic roaming charges. Its two rivals China Unicom and China Mobile, the country’s largest mobile carrier, quickly followed suit.

But why the lukewarm reception? Most consumers, it seems, feel that the move is too little, too late.

“I haven’t made a phone call in a long time. Most of my calls are placed through WeChat (Tencent’s mobile messaging application). I’m more interested in knowing when they will lower the cost of data,” one netizen wrote. Another agreed: “I thought the mobile carriers promised to lower the cost of data plans, what happened to that?”

The country’s regulators have long pushed the operators to abolish roaming fees. After all, they argue, roaming fees have become less of a factor, with data usage displacing voice calls as a major source of profit for the operators.

Wang Xiaochu, chief executive of China Unicom, admits that doing away with domestic roaming charges won’t much affect the bottom line, since only 4% of Unicom’s subscribers actually paid for mobile calls outside their local area, says Science and Technology Daily.

“Roaming charges are out of date,” proclaims Liu Dingding, an independent industry analyst.

China Mobile was the most stubborn opponent of the reform. Even though its data service has displaced voice calls as its biggest revenue contributor (last year, data accounted for 52% of its sales), voice still represents about 37% of its business. On average, a China Mobile subscriber – it has 837 million – spends 416 minutes making voice calls a month (a drop from 525 minutes in 2011).

Although China Mobile is scrapping domestic roaming fees, it is doing so gradually. New subscribers won’t have to pay them but existing subscribers must wait until their current contract is over to do away with the charges.

“Why is China Mobile dropping the roaming fees? It faces a lot of pressure from rivals like China Telecom. Secondly, regulators have been pushing for faster networks and lower rates for a long time. But a lot of it is also its own agenda. The mobile carrier wants to upgrade as many users as possible to its 4G network. So while it is doing away with roaming charges, it is hoping that this would prompt old subscribers to upgrade to new 4G service plans. So all in all, it is not actually losing that much money,” Xiang Ligang, an industry insider, told China High-Tech Industry Herald.

The change to the charges doesn’t mean that mobile users can use their smartphones freely when they travel, however. That’s because the telco operators still charge for data roaming, reminds 21CN Business Herald. China Mobile, which boasts a little more than 428 million 4G users, makes users pay about Rmb0.3 per megabyte of data downloaded when he or she leaves their local area.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.