Regulator pushes for removal of domestic roaming fees

A Chinese woman makes phone call at a business hall of China Mobile in Qionghai, South China's Hainan province, 17 May 2011.[Photo/IC]

China's telecom regulator said on Thursday it will push carriers to waive domestic roaming charges, a fee that is receiving wide criticism but still a key source of revenue for the "Big Three" telecom companies.

Wen Ku, director of the telecom sector under the Ministry of Industry and Information Technology, said mobile charges should be decided by the market and the government encourages carriers to gradually stop charging domestic roaming fees as competition heats up.

"We will make more efforts so mobile users will pay an equal price for local and cross-province calls," Wen said at a news conference detailing China's quarterly performance in industrial and telecom sectors.

The announcement sent down shares of the country's biggest carrier China Mobile Ltd by 0.16 percent on Thursday, to close at HK$91.45 ($11.79) in Hong Kong.

Chinese carriers collect domestic roaming charges on cross-province phone calls. The amount ranges from 0.6 yuan (9 cents) to 0.8 yuan a minute depending on the service packages subscribers signed up.

The roaming charges are set by the three State-owned carriers as long as the amount is lower than a ceiling price drawn by the ministry.

Mobile users have criticized the practice of collecting domestic roaming fees because they believe roaming long-distance calls do not add carriers' costs. The industry has been discussing the removal of roaming charges for years, but carriers seem slow to make solid moves.

Milly Xiang, a Beijing-based telecom analyst at the consultancy International Data Corp, said although voice revenue is declining, the service remains a major source of income for carriers.

"Given that carriers face multiple challenges in maintaining a sound profit, of course they will do whatever they can to slow down the process of removing domestic roaming to avoid further pressure on their profit margin," said Xiang.

The challenges include submitting base station rental fees to a newly established infrastructure operator known as China Tower and the declining average revenues the carriers can generate from each subscriber.

China Mobile's first-quarter voice call usage declined by 14 billion minutes year-on-year while data traffic usage jumped by 40 percent. The changes indicate its 830 million users are abandoning voice call services for internet communication applications such as WeChat.

Zhang Xu, a designer working in Beijing, said she stopped calling her parents who are living in Zhejiang province about a year ago because exchanging texts, voice messages and emoji icons on WeChat was "easier and effective".

China Mobile and the two smaller carriers, China Telecom Corp Ltd and China United Network Communications Group Co Ltd, did not immediately respond to the ministry official's comment. But the trio said earlier this year they will cooperate with the regulators on bringing down telecom fees while improving service quality.

Domestic roaming charges for calls between Beijing, Tianjin and Hebei province were scrapped in 2015 as a result of a national strategy aimed to grow economic ties among the three regions.

The ministry also said China's value-added industrial output, a key indicator for the economy, expanded 5.8 percent year-on-year in the first quarter, outpacing the 5.4-percent increase in the January-February period.