China removed long-distance call charges and roaming charges

Long-distance call charges and roaming charges are removed today on September 1, 2017. From September 1, the three operators move all domestic long-distance call charges and roaming charges, which is a good move for 2G and part of 3G users. But in the Internet era, social platforms based on data has occupied the market of call. Users care more about speeding-up and lowering price of mobile data. For them, the cancellation of the long-distance and roaming charges doesn’t make too much sense. However, for professionals, it seems impossible to achieve the goal of unified data charges in China in the next two years.

Long-distance call charge is cancelled

From what we have learned respectively from three carriers, after moving domestic long distance and roaming charges, domestic call will be charged at current local call cost and the domestic called party will be charged free. Customers do not need to apply for it as it will automatically work.

China Telecommunications Corp expresses that after the cancellation, the call of all packages no longer distinguishes local and non-local call, but different packages may be charged differently and specific fee varies according to user’s original packages. China United Network Communications Group Corp says that in the next step, it will continue to accelerate the speed and lower price through building 4G network, speed up constructing broadband optical network, innovating product marketing model, upgrading customer service and other aspects.

Fu Liang, an independent telecom analyst, thinks that long-distance and roaming charges should have been cancelled. It has been nine years since 2008 when the calling party was set at 0.6 yuan per minute and the called party was 0.4 yuan per minute. The price should have been lowered in 2012 and 2013. But in 2015, NDRC (National Development and Reform Commission) allowed operators independent pricing, which made operators reluctant to modify the charging rules. As each city has different situations, there are thousands of packages. For operators, modifying charge ways would not only reduce income, but also increase the workload, so they delayed it again and again, resulting in more and more disorder system.

It is known that most of the 4G users and some 3G users have already had no long-distance roaming fee and the cancellation is mainly aimed at 2G customers and some 3G customers. According to the latest data released by the Ministry of Industry and Information Technology, by July 2017, the total number of mobile users in China had reached 1.37 billion, with the total number of 3G and 4G users reaching 1.06 billion. The number of 2G mobile packages had reached 300 million, accounting for 22.62% of the total. The cancellation of the long-distance roaming fee will benefit a large quantity of people. Yang Jie, the chairman of China Telecommunications Corp, has previously said that the complete cancellation of domestic long-distance and roaming charges is expected to benefit 80 million users.

Some thinks that the cancellation will let operators suffer losses, while Xiang Ligang, an senior communication expert, thinks in the long term, it is not necessarily a loss but greater income space. Now the mainstream 3G and 4G packages don’t have long-distance and roaming charges, and thus there’s no change for these users. For users that needs to pay this charge, they are either who has used the old packages for years or senior citizens that only call and don’t use data. Operators can take this opportunity to turn the marketing focus to data, which is beneficial to both operators and consumers.

Data consumption is the mainstream

In fact, mobile users have already changed the consumption pattern. Unlike the previous “long telephone call”, mobile data has become the main consumption. Thus, the cancellation of long-distance and roaming charges is not a measure that benefits all users.

China Mobile expresses recently, for users of “He 4G” and “4G Feixiang”, their domestic calls (excluding Hong Kong, Macao and Taiwan) have been charged in accordance with the local price and is not affected by the cancellation. According to the data released by the Ministry of Industry and Information Technology, from January to July this year, mobile data income grew by 29.3% year on year. The revenue of fixed data and fixed Internet of three telecom enterprises reached 115 billion yuan, up by 9.3% than previous year, accounting for 15.3% of the telecom income. The revenue of mobile data and mobile Internet reached 320.9 billion yuan, up by 29.3% than previous year, accounting for 42.7% of telecom revenue and driving telecom revenue to grow by 10.2%.

While mobile call continues to decline. From January to July, the duration of mobile calls in China reached 1.57 trillion minutes, a year-on-year decline of 4.7%. The duration of fixed telephone calls nationwide reached 91.3 billion minutes, a year-on-year decline of 18.5%, and 0.1 percentage point lower than that of the first half. For operators, call revenue is already not the major market, and mobile data is the main source of revenue for the three operators. According to the statistics, in H1 2017, China Unicom’s user data totaled 2533.3 billion MB, a year-on-year increase of 326%, generating a revenue of 42.9 billion yuan, a year-on-year increase of 22.9%. And the unit price of data fell to 16.93 yuan/GB, a decrease of 71%. At the same time, China Unicom’s 4G user data per capita has soared from 1.2 GB/month to 3.3 GB/month.

In H1 2017, China Mobile’s mobile Internet data increased significantly by 107.5%. When overall revenue decreased by 36%, its wireless Internet data revenue grew by 33.7% to 187.7 billion yuan, accounting for more than 50% of the communication service revenue and continuing to play the role of the biggest source of income. The number of China Telecommunication subscribers reached 230million, an increase of 14.85 million than that in the end of last year. Among them, the number of 4G users reached 152 million, up by 3.15 million from the end of last year. 4G users account for 66% of all mobile users and total mobile Internet data is up by 126% than previous year.

Operators now cancel long-distance roaming charges because it is the requirements of relevant government departments and the loss of this part of the income does not affect the operators’ performance to a great extent.

Accused of insincerity

Many consumers interviewed by us think the cancellation on September don’t make too much different for them. They more hope operators to cancel roaming charges of mobile data.

Many users reflect that the fee reduction in mobile data lacks sincerity. Take businessmen who travel a lot as an example. They automatically consume national data first in the local instead of the local data. Consequently, when they take on a business trip, they always have to buy more data packages. For people need to take business travel frequently, they even buy 10 data packages per month. But the reality is that the local data can’t be used up, and can’t be used anywhere else, resulting in an increase in monthly bills.

“In fact, there is something wrong about operators’ deduction in this aspect. In local, it is local data that should be consumed as priority. And the remaining national data can be used in other areas as well as in the local, which can reduce monthly phone bill.” said Fu Liang.

In Fu’s view, the local data package in the local has discounts and is relatively favorable. But in terms of the national data, basic price doesn’t decline, such as 60 yuan/G standard. It is set by China Unicom in 3G era but has remained unchanged yet. But the cancellation of roaming charges of data may not be easy.

As is pointed by Kang Zhao, the editor-in-chief of Operators World Network, data is Internet business. When charging, it needs to consider the data among different operators, different companies in different provinces of the same operator as well as the branch companies in different cities and towns. For instance, if a China Unicom subscriber from Langfang uses mobile data in Tianjin, thus, the Langfang Unicom company needs to pay the internet charges to Tianjin Unicom. And the fee will be assumed by users, so data must be divided as local and non-local. It couldn’t be changed by operators alone. Only when the country reforms the Internet cost charges among operators can the division between the local and national data be removed.

As is learned by us, since June 15 this year, mobile users in EU area won’t be charged of roaming fees when they call, receive calls, send and receive text messages and surf the Internet during cross-border travel in EU area. The regional call charges will be reduced to 3.2 euro cents per minute, SMS costs down to 1 euro cents each, and Internet data fees will be gradually reduced. The call, message and the Internet surfing in 28 countries in the European Union will be paid in accordance with users’ mobile operators in their original countries.

“My package price has not changed during past years after the speeding-up and lowering price and has remained 88 yuan a month for 700M data. So, I haven’t experienced the change brought by speeding-up and lowering price. I don’t think operators are sincere enough in this aspect. ” said one consumer.

This article originally appeared in Beijing Business Today and was translated by Pandaily.

Click here to read the original Chinese article.