July 10, 2006, 10:50 AM — In response to a growing chorus of customer complaints, China Mobile Communications Corp. (China Mobile) issued new rules on Friday that tighten its supervision over wireless service providers.
Under the new guidelines, wireless service providers must offer China Mobile customers a one-month trial for all subscription services, including news, information, music, images, and ringtone downloads, before charging users for them. In addition, services that are charged on a per-message basis must be converted to a monthly subscription. Previously, service providers were required to offer trial service periods ranging from three to 11 days and could charge for some services on a per-message basis.
Service providers are not pleased with the new guidelines. "The impact will be negative and significant," said Tom Online Inc., warning its revenue could fall 15 percent because of the rule change.
The rule change will lower Internet portal operator Sohu.com Inc.'s wireless-services revenue by US$1.5 million to $2.5 million per quarter during the second half of the year, the company said. "Although user subscriptions will likely be affected in the near term, the industry's overall development should benefit in the longer term," it said.
China Mobile's new guidelines for wireless service providers were issued in response to customer complaints, including allegations that service providers overbilled users. The financial impact on service providers is expected to be clear when companies report their third-quarter results later this year.