The Ministry of Information Industries (MII) has threatened telecoms operators with fines unless they call a halt to price wars that have done much to harm profitability. Referring to the mobile services offered by China Mobile and China Unicom, Minister Wu Jichuan warned that the government would not tolerate the deregulation of price controls on core telephone charges. The two Hong Kong-listed companies are battling for market share.
In early September, said MII, China Unicom subsidiaries in Jiangxi province launched discounted promotional CDMA packages without getting prior approval. China Mobile's Jiangxi subsidiary retaliated by blocking interconnections to its rival. Both companies were fined.
Earlier notices posted on MII's website outlined changes to the way the government plans to control fixed-line and mobile telephone fees for most non-basic services. The changes were described as being consistent with a more competitive telecoms market and were part of China's requirements as a WTO member. They have led to several media reports claiming that the state would significantly reduce its intervention on pricing issues.
The ministry tried to clarify the situation by saying that operators had the right to adjust their pricing strategies but all changes to tariffs must first be submitted to MII for approval. Furthermore, a ministry official said there were no plans to change basic telecoms tariffs in the near future.