China Telecom (0728.HK), the country’s leading mobile carrier by 3G subscriber numbers in 2009, has cancelled its subsidies on 3G data cards. Starting February 1, subsidiary Beijing Telecom stopped offering free 3G interface network cards altogether, but the company’s local Shanghai-based subsidiary has retained a discounted policy for prepayment of annual fees.
The subsidy program, which provided free data cards to customers who prepaid for six months or a year of service, saw the company take an early lead in the 3G market over China Mobile (0941.HK) and China Unicom (0762.HK). China Telecom accounted for 46.1% of China’s 11.41 million-strong 3G user base in 2009. Now customers will have to pay US$53 (RMB360) to purchase a data card. However, China Mobile and China Unicom continue to charge data card subscribers based on data traffic, leaving them at a disadvantage to China Telecom’s time-based services.
The change in tack might suggest that China Telecom no longer sees significant benefits in subsidizing data cards to bring in users and will focus instead on subsidies for its CDMA2000 handset offerings. If this is the case, competition in the 3G handset market will only become more intense in 2010.