The MII, in its latest move to harness the expansion of the Xiao Ling Tong ( "Little Smart") phone market, has decided the city-wide wireless phones will be charged 0.2 yuan (US$0.024) per minute as well as a 25 yuan (US$3.01) monthly rental, effective on December 1. The service currently has 1 million subscribers.

An alternative plan could be implemented which stipulates a 35 yuan (US$4.21) monthly rental and charges 0.15 yuan (US$0.018) per minute.

Users in most of the country's 60 cities that have the system previously paid 0.2 yuan for three minutes on a calling-party-pays basis - almost the same as fixed phones for local calls.

To date, service providers in some of the 60 cities have started to update their billing systems in line with the MII decision, while other cities have been slow to take action, according to the providers reached by China Daily.

Xiao Ling Tong, which works within the boundaries of a single city, is an inexpensive handset similar to a mobile phone. It is based on the personal handy-phone system (PHS) that uses wireline instead of cellular technology, experts with UTStarcom, a leading personal access system supplier in China, explained.

The new price arrangement has triggered heated discussions on the web, but local telecom bureaux under China Telecom have remained silent.

Xi'an Telecom and Lanzhou Telecom in Northwest China - both among the earliest to run PHS technology wireless phones - Thursday refused to comment on the ministry's new price policy.

"No one has formally informed us about the price changes so far," alleged one official from Xi'an Telecom, who asked not to be identified.

Zhou Wangjun, of the Price Department under the State Development Planning Commission, said he believed the price changes were "quite necessary."

"What is behind the MII's notice is that the authorities do not encourage the development of PHS applications in China," he said. "Many people believe that PHS is not the future of mobile communications in the country."

PHS is believed to have led to wasteful duplicate construction, taking up channel resources, according to sources with the MII.

But Wang conceded that the flurry of small cities taking on wireless local phone services over the past two years indicates that they satisfy the needs of a host of consumers with relatively low incomes who cannot afford mobile phones, but enjoy the mobility of small handsets.

(China Daily 12/22/2000)