China liberalises telecoms tariff regulation to drive competition

BEIJING Fri May 9, 2014 6:44am EDT

BEIJING May 9 (Reuters) - China will allow telecommunications companies to independently decide tariffs for their services from May 10, to promote competition and give a greater role to market forces.

China Mobile Ltd, China Unicom Hong Kong and China Telecom Corp Ltd - along with "the market" - will determine the pricing of tariffs, the Ministry of Industry and Information Technology said on Friday.

The government had previously set pricing bands.

The liberalisation is part of broader deregulation of a telecoms industry widely criticised as inefficient, and will allow state-owned carriers to target lower income customers in rural areas where much of the potential growth is, analysts said.

"All telecom service tariffs will be regulated by the market, and telecommunications companies can independently draw up specific tariff structures, standards and billing methods," the ministry said in a statement on its website.

The move could also give mobile virtual network operators (MVNOs) greater independence in how they structure tariffs. MVNOs offer mobile phone services by leasing wireless capacity from carriers.

"From a competitive angle, it turns the carriers into real telecoms operators and they can learn how to compete as businesses without government support," said Mark Natkin, managing director of Beijing-based Marbridge Consulting.

"The growth is in rural areas. It will be easier for operators to get a higher percentage of people on board for mobile usage - one of the complaints was how high telecom fees are related to income," he said.

Companies such as Alibaba Group Holding, JD.com Inc and Suning Commerce Group Co applied for MVNO licences last year. The first MVNO was launched last week.

China Unicom declined to comment on the tariff liberalisation. Neither China Mobile nor China Telecom could be immediately reached for comment. (Reporting by Paul Carsten; Editing by Christopher Cushing)