SMS bonus for Xiaolingtong subscribers

In a shot in the arm for Xiaolingtong wireless phones, users will from today be able to send SMS (short messaging service) messages to China Mobile's GSM (global system for mobile communications) mobile phone subscribers countrywide, China Netcom said in a statement yesterday.

"Our marketing division is currently in negotiations with China Unicom to roll out a similar service between our Xiaolingtong subscribers and China Unicom's mobile phone subscribers," said Wang Shizhong, an official with China Unicom.

"However, we don't have a timetable for the completion of the negotiations right now."

In fact, trials for the cross service collaboration between the Xiaolingtong and GSM networks have been running since December 28 between China Netcom and China Mobile.

The Xiaolingtong service, also known as "Little Smart" or PAS (personal access system), is built onto the existing fixed-line network and lures users with low per-minute rates, one-way charges and cheap monthly fees.

China Netcom's Xiaolingtong users have been sending 3 million short messages to China Mobile subscribers every day during the trial period, the statement said.

The cost of sending short messages will differ from region to region, it said.

In Beijing, Xiaolingtong users have to pay 0.08 yuan (0.96 US cents) to send a short message, according to Tang Liuming, an official with Beijing Communication Corp, a subsidiary of China Netcom.

On the contrary, China Mobile users have to pay 0.15 yuan (1.8 US cents) for every short message to Xiaolingtong phones.

The inter-service SMS connection between Xiaolingtong and GSM phones will be conducive to the popularity of Xiaolingtong services, said Yang Qing, deputy director of the TeleInfo Institute of the Chinese Academy of Telecoms Research under the Ministry of Information Industry.

The service will also help boost the ARPU (average revenue per user) for both fixed-line and mobile operators, she said.

However, some analysts are worried the upcoming third generation (3G) of mobile telecommunications will gradually phase out the Xiaolingtong service as 3G offers faster wireless Internet connection and speedier data transmission as well as a full range of value-added telecoms services.

Nevertheless, there is still a market for the development of the Xiaolingtong service, though "its growth rate will gradually slow," said Dai Chunrong, an analyst with China Securities.

She said she believed that Xiaolingtong will continue to play an important role in driving revenue growth for both China Netcom and China Telecom as the market demand for traditional fixed-line services has shrunk in the face of stiff competition from cellular service providers.

In fact, to consolidate its market share, China Netcom signed a US$40 million contract with UTStarcom to expand its Xiaolingtong network in Beijing and Shandong and Henan provinces.

Simultaneously, China Telecom signed contracts valued at about US$120 million with UTStarcom to boost its Xiaolingtong network in Jiangsu, Zhejiang and Sichuan provinces.

"Although we have seen a slowdown of operator investment in new Xiaolingtong networks in China, the continued market demand for the PAS service is driving the additional expansion of the existing network capacity as represented by this contract," said Wu Ying, chief executive officer and chairman of UTStarcom China.

"We believe the demand for affordable wireless telecommunications in China, especially with the urbanization of western provinces over the next 10 years, will continue to drive the growth of Xiaolingtong."

The PAS system has become one of the major telecommunications services in China with more than 65 million subscribers by the end of last year.

Source: China Daily