BEIJING-China Telecom announced it signed up its 20 millionth mobile phone customer, a police officer named Zhang Qinghua in the scenic city of Hangzhou, at precisely 8: 45 a.m. on 18 August. In the first half of the year, China Telecom signed up 5.45 million mobile subscribers, or 30,200 a day, bringing the mobile penetration rate to 1.5 percent.
After connecting its first mobile phone customer in Guangzhou (Canton) in November 1987, it took China Telecom 10 years to register 10 million users, but the company signed up its next 10 million customers in just one year and one month. According its plans, China Telecom should have 40 million customers by year-end 2000, although this target may be surpassed.
The average annual subscriber growth rate since the beginning of the decade has been 163 percent. Because of the large installed base, the growth rate is slowing, but China Telecom still is adding a larger number of mobile phone users every year.
China already is the third largest mobile phone market, right behind the United States and Japan. China Telecom is the world’s biggest GSM (Global System for Mobile communications) operator, with 13 million subscribers-one-seventh of the world’s total.
Datang breaks foreign hold
In the public switching equipment market, China now is challenging foreign domination in its mobile market. The country’s first domestically designed GSM switching system entered a commercial trial in Guizhou province in early August.
The M30-G switch and HLR30 were developed jointly by Xian Datang Telecom, a subsidiary of Datang Telecom Ltd. listed on the Shanghai stock exchange, and Orient Communications Ltd. The system is based on Datang’s SP-30 central office switch. Datang now is ready to launch mass production. Motorola Inc. provided technical assistance.
Another network recently cut over is China Great Wall Telecom’s 800 MHz CDMA (Code Division Multiple Access) network in Shanghai. Sixty-seven base stations with a capacity of 61,000 subscribers cover the whole of Shanghai’s administrative district. The equipment was supplied by Korea’s Samsung Electronics Co. Ltd., the company that built in Seoul the world’s first large commercial CDMA network.
Less exciting news for CDMA equipment suppliers is that China decided to concentrate on the expansion of its GSM networks and to postpone implementation of CDMA.
Monopoly challenged
Amid euphoric reports about China Telecom’s spectacular growth, the China Reform Daily has been lamenting the continued monopoly the company is enjoying, which has grown into one of the world’s biggest telecom operators but has passed very little cost savings onto subscribers.
Long-distance calls are five times more expensive in China than in the United States. The price of mobile services has dropped dramatically due to competition from China Unicom, leading to the popularization of the mobile phone, but installation fees and fixed-network call charges have been dropping only very recently, and according to some analysts, are still three times higher than actual costs.
China Unicom in the past has accused the former Ministry of Posts and Telecommunications of unfair competition by shielding its offspring China Telecom. Only in July, a full year after the installation of its fixed-line network in Tianjin, did China Unicom receive the green light to interconnect with China Telecom’s network. China Telecom immediately lowered its phone installation fee from 3,500 RMB (US$423) to 1,000 RMB (US$121), the lowest of all large- and medium-sized cities in China.
The China Reform Daily alleges that China Telecom is using its fixed-line network to subsidize its mobile network, something that China Unicom is unable to do because it only has one small fixed-line network in service.
